Allocating Labour Costs
Overview
Vinsight has no special labour handling, it is however easy to incorporate an already calculated labour cost to Grower Operations, Bulk Operations, Packaging Operations or as an indirect “overhead” using Component Allocations. While this document describes labour costs, you could use exactly the same approach for other costs, eg costs from contract processing, outsourced pruning, custom crush or contract bottling. Simply create Stock Items for each eg “Cost-Bottling Fees” etc.
Note: This is only relevant for subscriptions that have costing features.
In this document:
Creating a Stock Item for Costs like Labour
Create a stock item for your cost eg “Labour” or “Cost-Contract Processing”, for most flexibility, use a Unit of Measure like “dollar” and make the Standard Cost $1.00 or your local currency unit.
Set the Bulk Additive, Grower Additive and Packaging flags to ensure it shows on the right lists in the app.
The reason to use a unit like “dollar” (or Euro, Rand etc) rather than “hour” or similar is that this makes your cost allocation super flexible, eg if you have 3 different pay rates per hour, you still only need to apply one item for the total labour cost not 3 items with 3 different costs.
Applying costs to operations
Now once you complete operations and have used your other labour management tools to give you a total cost, enter this total as an additive on the operation. The “Quantity” is the only box you really need to edit, as the “price” should always already be $1, and $1 x Quantity should give you the correct total cost, i.e. entering one total quantity does everything you need.
eg:
This will show as a cost along side other additives like labels and ingredients etc.
You can do something similar for Grower Operations, Bulk Operations and Packaging Operations.
Notes on accounting:
Adding costs on operations will, through the end of month journals, remove cost from asset accounts like “bulk additives” or “packaging” and move it to the relevant current asset ledger like “Bulk WIP” (Work In Progress) or “Finished Items” etc.
However you need to have costs available to move if you do not want your source asset ledgers “overdrawn”. So what you can/should do is for services from other suppliers eg Contract Bottling companies, you would write a purchase order and code the Bottling Fees to your “packaging” current asset so the bottling operation and subsequent journals have money available to apply to the Finished Item.
For costs like Labour: in your wages system you might code certain activities so they get capitalised to a current asset account like “Wages to Capitalise” or similar. So these have balances to journal at the end of the month.
For more information on end of month journals and recommended chart of accounts, have a read here: End of Period Inventory Journals