Costing User Event

1. Costing User Event Drew Winborn and Kirk Southcott

2. Challenge: • Too many transactions avocado pulp output transactions in the item ledger entry table

3. Resolution: • Create a separate form and table in the 50000 range to track only pulp trans • actions including the line, employee, lbs, etc.

4. Create a separate form and table in the 50000 range to track only pulp transactions including the production line, employee, lbs, etc.

5. 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

7. 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

8. 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

9. 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

10. How to properly calculate the manufacturing cost per lbusing base-variable 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 JustFoodERPrountings, 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.

11. 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.

12. Divide manufacturing expenses into Base, Variable, and Semi-variable • Pull the output LBS by finished goods by SKU from JustFoodERP

13. Divide manufacturing expenses into Base, Variable, and Semi-variable

14. 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

15. 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

16. 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

17. Labor and Overhead on Production BOM Production Order Statistics Bill of Material

18. 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

19. Resolution: • Fresherized utilized the “Full Bin Consumption” functionality in NAV