David Krause12.1 Why post-calculation is indispensable
A pre-calculation is a forecast. It rests on standard times, experience values and assumptions about material and tool life. Whether those assumptions were correct, you only know once the order is done — and only if you recalculate.
Companies that skip post-calculation cost for years with standard times no one ever checked. The typical course: the pre-calculation is set up carefully once, then copied for similar parts — and the creeping deviation only shows up when the year-end result no longer adds up.
Post-calculation serves calibration, not blame. Its result is not "the order went badly" but "our standard times here are 19 % too optimistic". Whoever uses it as a control instrument against production gets whitewashed feedback and loses exactly the data basis they wanted to improve.
12.2 Data sources
| Quantity | Source | Typical pitfalls |
|---|---|---|
| Actual times | shop-floor feedback (BDE), machine data | setup time booked to one order although several orders benefit from it |
| Actual material | stock withdrawals, goods receipt | offcut and scrap parts not booked along |
| Actual tooling | tool issue per cost center | order allocation missing — then only recordable as overhead |
| Surcharge rates | BAB (Chapter 5) | for post-calculation the same rates are used as in the pre-calculation |
In post-calculation the plan surcharge rates are deliberately used, not the year's actual rates. Otherwise two effects are mixed: the single order's variance and the cost center's over- or under-absorption. Both are interesting — but separately. The cost-center variance belongs in the absorption control from Chapter 5.6.
12.3 The plan-actual comparison
The order from Chapter 11: titanium housing Ti6Al4V, lot 50, calculated net cash price €182.77 per unit. After completion the shop-floor feedback is in.
| Item | Plan | Actual | Var. | % | Cause |
|---|---|---|---|---|---|
| Direct material | 85.00 | 89.40 | +4.40 | +5.2 % | Ti surcharge per purchase document |
| Material overhead (9.0 %) | 7.65 | 8.05 | +0.40 | +5.2 % | follows MEK |
| → Material costs | 92.65 | 97.45 | +4.80 | +5.2 % | |
| Direct labor production | 9.60 | 11.47 | +1.87 | +19.5 % | actual time 21.5 vs. 18.0 min |
| Direct labor CAM | 1.15 | 0.88 | −0.27 | −23.5 % | CAM time 55 vs. 60 min |
| Residual overhead (35.1 %) | 3.77 | 4.33 | +0.56 | +14.9 % | follows DL |
| Machine costs (MHR × time) | 15.77 | 18.32 | +2.55 | +16.2 % | occupancy 23.7 vs. 20.4 min |
| SEKF special mill | 4.20 | 6.80 | +2.60 | +61.9 % | tool life halved |
| SEKF fixture | 4.80 | 4.80 | 0.00 | 0.0 % | as planned |
| → Manufacturing costs | 39.29 | 46.60 | +7.31 | +18.6 % | |
| → Cost of production | 131.94 | 144.05 | +12.11 | +9.2 % | |
| VwGK + VtGK (17.8 %) | 23.49 | 25.64 | +2.15 | +9.2 % | follows HK |
| SEKV free delivery | 3.50 | 3.50 | 0.00 | 0.0 % | terms unchanged |
| → Total cost | 158.93 | 173.19 | +14.26 | +9.0 % | |
| → Profit per unit | 23.84 | 9.58 | −14.26 | −59.8 % | price was fixed |
The order cost €14.26/unit more than calculated — at lot 50 that is €713.00 of extra cost. The planned profit of €1,192.00 shrank to €479.00. Three drivers, by weight: the SEKF mills wore out twice as fast as planned (+€2.60), the machine occupancy ran 16 % over plan (+€2.55), the machining time at the operator 19 % above it (+€1.87).
Notable is the counter-movement: the CAM programming was five minutes faster than planned. It compensates barely a seventh of the time overrun — too little to turn the result, but a pointer to where the pre-calculation was too cautious.
12.4 Classifying variances systematically
Not every variance requires the same action. The following systematics orders them by cause and urgency:
| Type | Typical causes | Action | Priority |
|---|---|---|---|
| Time variance DL, MHR | Imprecise standard-time studies · new machine or operator · underestimated setup complexity | Adjust standard times, document experience values from post-calculation | high |
| Tool over-consumption SEKF | Harder material than expected · wrong cutting data set · quality fluctuation | Raise SEKF assumption, optimize cutting data, tool monitoring | high |
| Scrap and rework | Tolerance exceeded · tool wear · programming error | Build scrap rate into the calculation, improve production release | high |
| System error calculation-based cause | Wrong MHR · outdated BAB · superseded capacity assumption | Update BAB and MHR — affects all orders, not just this one | high |
| Material price variance | Raw material price · currency effect · small-quantity surcharge | Keep MEK current, framework contracts, risk surcharge on volatile materials | medium |
| Positive variance | Better cutting data · learning curve · setup optimization | Document and adopt as new standard values | medium |
System errors look like order variances but aren't. If the machine hour rate is wrong or the BAB outdated, every order deviates — only no one notices, because the cause is sought at the single order. The test: if several independent orders show the same variance direction, the problem lies in the costing basis, not in production.
12.5 The learning-curve effect
For repeat orders, post-calculation regularly shows a learning-curve effect: each repetition runs faster, because operator and machine are set up for the part. The widespread 80-percent learning curve holds that at every doubling of cumulative quantity the manufacturing time falls to 80 % of the initial value.
| Order | cum. units | setup actual | unit time actual | DL var. | Effect |
|---|---|---|---|---|---|
| 1st | 50 | 78 min | 21.5 min | +18.6 % | first order — baseline |
| 2nd | 100 | 65 min | 19.8 min | +8.6 % | −8 % from learning curve |
| 3rd | 200 | 60 min | 18.5 min | +3.3 % | approaching the standard unit time |
| 4th | 500 | 58 min | 17.8 min | −1.1 % | below standard — adjust calculation |
| 5th | 1,000 | 56 min | 17.2 min | −3.9 % | set new standard time: 17.2 min |
From the third follow-on order the actual times should be adopted as new standard times. Whoever keeps costing with the original values becomes systematically too expensive and loses follow-on orders — in the example, at the fifth order the calculation would sit 3.9 % above the actual time. Conversely: whoever applies the run-in times to a first order under-costs. The clean approach is separation — apply a justified start-up surcharge for first orders and show it in the quotation, then the customer also understands why the second order comes cheaper. Rule of thumb: update standard times after the third order, then review annually.
12.6 Checklist
- 1Actual times pulled from BDE and checked for booking errors?
- 2Actual material recorded including offcut and scrap?
- 3Same surcharge rates used as in the pre-calculation? → Ch. 5
- 4Variances classified — order or system error?
- 5Positive variances also evaluated and adopted?
- 6Standard times for the follow-on order adjusted and documented?
- 7On system error: BAB and MHR reviewed? → Ch. 5–7
Chapter 13 leaves the full-cost view. It splits costs into variable and fixed components and thereby answers questions full costing cannot: is an order below total cost worthwhile? Make or buy? From what quantity does the cost center carry itself?
