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Production Costing Overview & Checklist

Overview

What can you achieve with good costing?

•  Accurate Inventory Valuation:  The Stock on Hand Report  uses costs to value both produced and purchased inventory.

•  Detailed Product Costing:  Determine and review costing of a batch, case or even an individual bottle.

•  Comprehensive Costing Breakdown:  Drill into the product costing to determine exactly what portion of that product cost was fruit cost, labour, additives, packaging and overhead.

If you are using a subscription level that supports product costing, follow the tips below to get these working to your best advantage:

Costs in Vinsight are composed of 4 main areas:

1. Fruit/Bulk Wine Purchase Costs:  The costs associated with your harvest or bulk wine purchase.

2. Direct Production Costs:  Wine additives or contract processing directly attributed using winery operations.

3. Packaging Costs:  Dry goods, such as labels, screwcaps, bottles and cartons, as well as any directly attributable processing costs, such as bottling charges.

4. Indirect Costs Attributable to the Product: Any overheads such as electricity, labour or rent that you wish to include in your product costing.

 

Fruit/Bulk Wine Purchase Cost

1.    Determine your per harvest costs and when ready, update each harvest or bulk receival with their correct total cost.  This does NOT have to be done at the time and can be done retrospectively.

2    Ensure your winemaking team accurately records blending and losses of wine, as the costing process relies on this data.

See Costing Information (Harvests and Bulk Receivals) for more details.

 

Direct Production Costs

Every winery operation that uses additives will take dry goods inventory out of stock and add these to the wines using the Stock Item’s specified  “Standard Cost”.  To ensure this cost is correct, review each additive Stock Item and ensure:

1.    The Standard Cost in the Costing area of the Stock Item is correct for the unit specified, e.g. $5.45 per Kg.  See Setting Standard Costs for more information.

2.   The Conversion Rates in the Stock Item make sense, (e.g. gram == 1 and Kg == 1000 etc).   See  Conversion Rates for more information.

 

Direct Packaging Costs

All the same tips apply here as with direct production costs.

 

Indirect Costs – Overhead Allocations

During the month you can accumulate overheads in a holding account, then use the overhead allocation feature in Vinsight to spread these costs out amongst the bulk wine in the winery using allocation rules as you see fit. eg 80% of electricity to white wine, barrel depreciation to red wine etc.   There isn’t too much to do here except check that what you accumulate, and what you allocate tally up

See Overhead Allocations more more detailed information.