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Setting Standard Costs

Overview

Standard Costs form the basis of all product costing and valuation in Vinsight.  This cost is manually entered against each product, in the ‘Costings’ area of each Stock Item.  See below for information and tips on how to maintain an accurate ‘Standard Cost’.

In this document:

 

 

Standard Cost of Purchase Items

The ‘Standard Cost’ of  a Purchase Item would generally be the price at which you purchase that item, together with any other set margins you want to include for cost of goods reporting per unit.  Set the ‘Standard Cost’ of each purchase item by going to the ‘Costing’ area of the Stock Item in question.

StandardCost

Using the Purchase Order system in Vinsight, helps you keep on top of the Standard Costs (as well as maintaining accurate inventory levels).  If you need to edit a purchase order to reflect a price change, this is a timely reminder that you may need to update the Standard Cost for this item.  Vinsight does NOT change the Standard Cost automatically.  You need to ensure that your Standard Cost fairly reflects the unit cost of those items you have in stock at any one time, as all reporting will use the current Standard Cost.

If there are one-off extra costs on an invoice received, that do not justify changing the standard cost,  the easiest way to deal with this might be to apply the extra cost using the overhead allocation features.  See Overhead Allocations.

Automated Purchase Order Standard Costs Option

With respect to purchase order costs, we have a new feature that enables a more automatic flow-through of costs, if you would like to try it.  To enable this you will need to go to Settings > Advanced Settings > Vinsight Flags, switch the ‘Review Standard Costs at Receival’ Flag to ‘On’ and click ‘Save’.
Turning this on will cause Vinsight to prompt you with a ‘Review Costs’ dialog every time you receive a Purchase Order.  This dialog will look something like the following:
Here you are given options regarding how you would like your new Standard Costs for the Stock Item purchased to be calculated.
For example, you can choose the next standard cost to be
If you select the ‘Weighted Average’ option, you have a further choice about whether to include the current Stock Item Standard Cost in that average, or just those in the purchase order(s) being receipted.
You will need to click the ‘Update Standard Costs’ button to save and use the costs selected.
The Standard Cost Type you select here will be shown in the Stock Item as the ‘Default Next Standard Cost Type’ value (next to the Standard Cost).

Standard Cost of Finished Items

Determining the ‘Standard Cost’ of finished items is easy as the actual costs are tracked by Vinsight as the bulk product is processed, goes through the manufacturing process and is finally bottled to finished goods.

Once you have packaged and created the new Stock Item, you can view these accumulated costs by going to the ‘Finished Item Components’ area of the Stock Item and clicking the ‘View Blended Composition’ button.

FinishedItemComponents

Once viewing the Blended Composition, click on the ‘cost summary’ tab.  This will show a summary of all costs accumulated for that product, broken down into its various components.   Sense check the number, then click ‘Use as standard cost’ to use this total as the ‘Standard Cost’ for your finished item.
BlendedComposition

This total will then appear in the ‘Costing’ area of the Stock Item as the Standard Cost.

StandardCostNew

 

You can also view the accumulating costs through the production process, using firstly the ‘Bulk Wine Cost Summary’ report and then the ‘Bottled Wine Cost Summary’ report.

 

BottlingWineCostSummary