Transcript Costing - JustFoodERP

COSTING USER EVENT
DREW WINBORN
AND
KIRK SOUTHCOTT
CHALLENGE:
 Too many transactions avocado pulp output transactions in the item ledger entry
table
RESOLUTION:
 Create a separate form and table in the 50000 range to track only pulp trans
actions including the line, employee, lbs, etc.
 Create a separate form and table in the 50000 range to track only pulp
transactions including the production line, employee, lbs, etc.
 Simple shop-floor form created to populate the avocado output table
 LBS and Banda (production line) register automatically from the scale
 Hour and date record into the table based on the actual date/time to further
reduce the shop-floor information input requirements
CHALLENGE:
 Fresherized Foods’ margins are highly reliant upon the cost of fresh avocados
 All avocados bought in Mexico are purchased at the spot price (no contracts),
which leads a very volatile cost of material structure
 Fresherized felt was key to have the material cost recorded in NAV separate from
the other parts of COGS (manufacturing, repair & maintenance, supplies, etc)
 Fresherized wanted to the cost of material readily available in NAV without having
to deduct the other COGS costs from the cost per case recorded in the NAV GL,
item ledger entry, and value entry tables
RESOLUTION:
 Fresherized utilized the alternate cost tables for the manufacturing cost which
results in only the material cost per case being recorded in the GL, item ledger
entry, and value entry tables
 Alternative Cost tables are utilized and updated once per quarter to reflect the
actual manufacturing cost per lb by SKU based on the most recent quarter’s
financials
HOW TO PROPERLY CALCULATE THE
MANUFACTURING COST PER LB USING BASEVARIABLE ABSORPTION COSTING

The primary objective of Base-Variable Absorption is to accurately apply manufacturing costs
by finished good SKU that take into account both the manufacturing facility’s fixed and
variable costs

First, manufacturing plant’s expenses should first be divided into base (fixed), variable, and
semi-variable. This will produce a base cost per lb (or whatever UOM is utilized) and a
variable cost per lb. JustFoodERP can be very helpful in identifying these costs.

Next, the throughput of each SKU should be identified. If using the JustFoodERP rountings,
calculate the time it takes each SKU to move through the production facility. Then, using
either a simple or weighted throughput average, calculate the “throughput factor of each
item”.

Last, multiply the variable cost per lb only to the throughput factor and add this result to the
Base cost per lb. This will provide the Base-Variable absorption rate per lb.
DIVIDE MANUFACTURING EXPENSES INTO BASE,
VARIABLE, AND SEMI-VARIABLE
 Use GL Balance by Dimension, or any other method to pull balances from GL
accounts, to pull the manufacturing expenses to be used in the study.
DIVIDE MANUFACTURING EXPENSES INTO BASE,
VARIABLE, AND SEMI-VARIABLE
 Pull the output LBS by finished goods by SKU from JustFoodERP
DIVIDE MANUFACTURING EXPENSES INTO BASE,
VARIABLE, AND SEMI-VARIABLE
Manufacturing Cost Account
Total
Manufacturing Labor
$
142,365
Repair & Maintenance - UHP
185,384
Professional Services
26,306
+
134,057
$
Variable
440,610
Supplies
Office
Base
Semi-Variable
$ 440,610
Semi-Variable Allocation*
34.6%
65.4%
Base
Variable
$ 152,451 $ 288,159
142,365
185,384
26,306
134,057
928,722 $ 160,363 $
327,749 $
440,610
$
152,451 $
288,159
Base-Variable Allocations
*Semi-Variable Allocation Factors derived from fixed and variable labor costs
Total LBS of Output
1,776,404
Base Cost per LB
Total Base Cost
Total LBS of Output
Base Cost per LB
$ 312,814
÷ 1,776,404
$
0.176
Variable Cost per LB
Total Variable Cost
Total LBS of Output
Variable Cost per LB
$ 615,908
÷ 1,776,404
$
0.347
Total Manufacturing Cost per LB
$
0.52
TOTALS
Base
Variable
$ 152,451 $ 288,159
142,365
185,384
26,306
134,057
$ 312,814 $ 615,908
33.7%
66.3%
CALCULATE THROUGHPUT FACTORS BY SKU
 The combination of the JustFoodERP routings and JET or Powerpivot reports gives
you the ability to easily calculate the throughput by SKU
Throughput LBS JET report using Routings
Net
Routing No.
Throughput
Total
Weight Lot Size Run Time Lot LBS Item #
Description
1.00 0128280 CS Sysco Avocado Half 12/16 oz
LBS/hr
P2_ROLL_H_16
1.00
1.00
0.24
P2_DINI2_2_12
0.75
296.00
10.05
222.00 11275
Sig. Cafe Guac Mild 6/12 oz
1,325.24
P2_MLTI5_P_32
2.00
96.00
5.50
192.00 120700
Brinker Avocado Bags 8/2 LB
2,094.55
P1_HBK_S54_15
0.94 1,510.00
Wholly Guac Classic 8/15oz
1,213.39
70.00 1,415.63 14178
Simple Average Throughput LBS/hr
252.63
1,221
LBS Output
24,128
735,198
202,278
814,801
1,776,404
Weighted
x
x
x
x
6,095,548
974,314,810
423,679,748
988,673,152
2,392,763,259
LBS per Hr x LBS of Output
2,392,763,259
LBS of Output ÷
1,776,404
Weighted Throughput LBS/hr
1,347
Factors
5.33
1.02
0.64
1.11
APPLY THROUGHPUT FACTORS AND CALCULATE
TOTAL SKU COST PER LB
 Check that total cost per lb multiplied by the LBS of output ties to financials and
then load the costs into the alternate cost tables
Item #
Description
0128280 CS Sysco Avocado Half 12/16 oz
11275
Sig. Cafe Guac Mild 6/12 oz
120700
Brinker Avocado Bags 8/2 LB
14178
Wholly Guac Classic 8/15oz
Base
Cost/LB
$ 0.176
0.176
0.176
0.176
Variable Throughput Variable
Cost/LB
Factor
Cost/LB
$ 0.347
5.33 $ 1.849
0.347
1.02
0.352
0.347
0.64
0.223
0.347
1.11
0.385
Total
Cost/LB
Cost/LB Adjusted
$ 2.02 $
1.93
0.53
0.50
0.40
0.38
0.56
0.53
LBS
Total Cost
Output Tie to Financials
24,128 $
46,524
735,198
370,027
202,278
76,874
814,801
435,298
$
928,722
PRODUCTION COSTING SCENARIOS
•
Work center by time
•
Work center by unit
•
Cost on routing based on unit
•
Labor on routing and overhead on workcenter
•
BOM components items as labor and overhead
LABOR AND OVERHEAD ON PRODUCTION BOM
Production Order Statistics
Bill of Material
CHALLENGE:
 Raw Materials move into production room without a specific production order
number being assigned
 Production room similar to a giant hopper, raw materials moved into one end and
finished goods outputted from the other side
 Impossible to identify the exact lbs of a specific lot of avocados/film/trays that
were consumed on a specific production order
RESOLUTION:
 Fresherized utilized the “Full Bin Consumption” functionality in NAV