Standard cost calculations

How are standard costs calculated?

Updated over a week ago

User-level: System Administrator (for set up)

A standard cost is automatically calculated for each staff charge-out rate and inspection rate.

The purpose of the standard cost is to provide a cost rate that project managers can budget to, without sharing any core financial information about a staff member

The standard cost is calculated as the charge rate less the target margin % set in the financial controls. A charge rate can't be discounted below the standard cost and still make a profit.

# Standard cost formula

The formula used to calculate the standard cost is:

(Charge per unit) / (1+(Target profit / 100)) = Standard cost per hour

## Examples:

 Charge rate per unit Target profit Standard cost \$100 25% (\$100) / (1 + (25/100)) = \$80 \$100 30% (\$100) / (1 + (30/100)) = \$76.9

By default, Synergy sets the target profit for the organization to 25%. This can be updated in the financial controls.

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