Job Costing in Steelhead

My name is Jordan Peterson with Steelhead Technologies and in this video we're going to discuss job costing in Steelhead. I want to start by discussing costing optionality with the tools that we have in Steelhead. So depending on the nature of the work that you do or the way that your organization is set up, you may have different costing metrics that you want to pay attention to. So with using the standard costing formula here as a frame of reference, we can look at how standard costing is maybe used for quotes and estimates in determining pricing and how we can use tools in Steelhead to determine direct material, direct labor, and overhead cost to compare that to our estimated cost for jobs.

So starting with direct labor in Steelhead, we're going to use labor timers to get an actual costing and tracking of this direct labor. Moving over to Steelhead here just to show an example, we have a part that is ready for a masking or plugging step. One option for labor timers is to have an auto-starting labor timer in a station that is always going to have labor costing. So when I move this part into masking and plugging, we can see that I have a timer start counting labor for my user. Now as long as I'm working on this part, it'll count that labor and attribute that to that job as a cost.

Another option is to just clock in or track labor on the station as a whole so that any parts in the station are attributed my labor time. In this case, maybe I just do an overarching labor timer and I select which station I am working in. Now that'll start my labor in masking and plugging, but when I move a part into that station, it's not going to start an individual direct labor timer for that part but instead is applying my labor distributed across the parts that are in that station.

Those are two quick examples of how we can use labor timers to determine our direct labor. Now if we looked at direct material and overhead cost, we can see there there's a comparison between the actual cost here versus a calculated cost. Again depending on the nature of the work that you do and the complexity of tracking that cost.

Starting on the right-hand side here with overhead, if we're to look at a different example of a plating line setup where we don't have much labor on this line but we have an operational overhead cost for running this line. In this case, if I move a part onto a plating line, we can see that I don't have a timer started but if I drill into that station for plating line one, we can see that I have an operational overhead rate of $500 per hour.

In this case, the time that the part sits in that station will be the costing time attributed with the $500 per hour overhead. I may also do this on a scanner line setup where I am having frequent movements between tanks and I want to track tank by tank rather than just a line in general.

Now to discuss the direct material cost: If we look at an actual versus calculated example here, we might use a paint example where we're putting a top coat on a part. If we drill in, we can see we have a certain paint being used on this part for the top coat. If I want to go actual costing on this job, I can deplete per this work order the amount of paint that is used. In this case, let's say I use one gallon of paint; it's going to be attributed to this work order 3402 and now that cost is saved to look at my margins later.

An example of a calculated material cost may be where we're using a plating line setup again and we're going to add nickel to the plating tank. This is now an inventory from the inventory side. When I go add units of nickel, I can deplete that from inventory. Let's say I'm adding 50 units; there has been 50 units used since the last time I depleted inventory. So I can attribute that cost of inventory to the work orders that have gone through that tank in that time period.

If I add recent work orders, I then can do a calculated estimation of what the cost is per work order. So I can set an equal distribution across all work orders or deplete more granularly by part count estimation. This will change the quantity and cost attributed to each different work order.

Overall now how do we compare our actual calculated and collected cost to our standard costing estimate and quoted price? From a high level, I can view my orders here and for completed ones, see my margin on those orders. If I want to drill further into why an order was only 6% margin, I can see my total price and then my different costs: my labor cost, station operation or overhead cost, inventory cost based off what was depleted for that order.

It may also have an overhead cost for admin work. If I go back out to sales order entry or any paperwork needed, I could start a timer here to collect additional overhead attributed as overhead cost.

One step further: If I want to see how this part number runs over time, I can drill into it and see margins for previous runs of this part. In this case our average margin for this part is 133%. Maybe blasting seems expensive or bottlenecking; investigate ways to reduce costs or increase prices accordingly.

That's an overview of how Steelhead compares standard costing and actual costing.