Effective Labor rate in Microsoft Dynamics AX 2012

Hello Everyone,

It has been very long spending time in my blog. Have been very busy at work since last few months. Today, I wanted to write about another new functionality which Microsoft Dynamics AX 2012 R 2 has introduced. It is the ability to designate the project cost as an Effective Labor Rate (ELR).

The ELR – Effective Labor Rate is actually the dollar value income per hour of an employee after calculating productivity. Alternatively, the ELR defines the hourly cost of a worker, if they work all the available hours in a work week.

AX 2012 R2 enables us to indicate the cost price of a worker as ELR. In the following few steps we will see how do we setup ELR in AX 2012 and then we will see how the ELR calculation happens when we post labor transactions/timesheets for them.

• To define the ELR for an employee, go to Project Management and Accounting > Setup > Prices > Cost prices (Hour).
• Setup the cost price for the employee and then check the Effective labor rate check box.

• Go to HRM > Workers > Select the worker and then click Project Management > Project Setup and mark Use ELR.

• In the above screens, I have setup the cost of the worker as $100 and marked it as ELR. Also, this worker is setup to work 8 hours each day (Monday to Friday) in the resource calendar)
• Now, lets go record a project hour journal to see the impact of ELR and see how the calculation happens.
• Notice that system does not populate the cost price field.

• Let us say the employee worked for 24 hours in a given week. Enter Hours = 24 and post the hour journal.
• Now let us go to Posted project transactions and verify how system has automatically ELR.

• As we can see in screen above, system has automatically calculated the cost price based if the worker would have worked for full productivity hours(40 hours ) for the week.
• So the formula for ELR calculation is as given below.

ELR  =  Effective labor rate price per hour($100)* Number of hours per week per the worker’s work calendar(40)/Number of hours worked/registered in the week(24).

This is it for today’s post. Till next time !!