D R E W W I N B O R N
A N D
K I R K S O U T H C O T T

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 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 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

Supplies
Office
DIVIDE MANUFACTURING EXPENSES INTO BASE,
VARIABLE, AND SEMI-VARIABLE
Semi-Variable Allocation* TOTALS
Manufacturing Cost Account
Manufacturing Labor
Repair & Maintenance - UHP
Professional Services +
Total
$ 440,610
142,365
185,384
26,306
134,057
Base
26,306
134,057
Variable Semi-Variable
$ 440,610
142,365
185,384
34.6%
Base
$ 152,451
65.4%
Variable
$ 288,159
Base
$ 152,451
-
-
26,306
134,057
Variable
$ 288,159
142,365
185,384
-
-
$ 928,722 $ 160,363 $ 327,749 $ 440,610 $ 152,451 $ 288,159
Base-Variable Allocations
$ 312,814
33.7%
$ 615,908
66.3%
*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
Variable Cost per LB
Total Variable Cost
Total LBS of Output
Variable Cost per LB
$ 312,814
÷ 1,776,404
$ 0.176
$ 615,908
÷ 1,776,404
$ 0.347
Total Manufacturing Cost per LB $ 0.52

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
Routing No.
P2_ROLL_H_16
P2_DINI2_2_12
P2_MLTI5_P_32
P1_HBK_S54_15
Throughput LBS JET report using Routings
Net Total
Weight Lot Size Run Time Lot LBS Item # Description
1.00
0.75
2.00
0.94
1.00
296.00
96.00
1,510.00
0.24
10.05
5.50
70.00
1.00
0128280 CS Sysco Avocado Half 12/16 oz
222.00
11275 Sig. Cafe Guac Mild 6/12 oz
192.00
120700 Brinker Avocado Bags 8/2 LB
1,415.63
14178 Wholly Guac Classic 8/15oz
Simple Average Throughput LBS/hr
LBS/hr LBS Output
252.63
1,325.24
2,094.55
1,213.39
1,221
24,128
735,198
202,278
814,801
1,776,404
Weighted x 6,095,548 x 974,314,810 x 423,679,748 x 988,673,152
2,392,763,259
Throughput
Factors
5.33
1.02
0.64
1.11
LBS per Hr x LBS of Output 2,392,763,259
LBS of Output ÷ 1,776,404
Weighted Throughput LBS/hr 1,347

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 Total Cost/LB LBS Total Cost
Cost/LB Factor Cost/LB Cost/LB Adjusted Output Tie to Financials
$ 0.347
0.347
0.347
0.347
5.33
1.02
0.64
1.11
$ 1.849
0.352
0.223
0.385
$ 2.02
0.53
0.40
0.56
$ 1.93
0.50
0.38
0.53
24,128
735,198
202,278
814,801
$ 46,524
370,027
76,874
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