Do you have insight into the different factors that may cause your production cost to fluctuate?
As sales and marketing review how your price points stack up on the grocery shelf, your production managers need to calculate labor, packaging, and overhead production costs at the batch level so you can review actual costs by product, formula, or production facility over a given time period.
Are you able to calculate materials including labor, packaging, and overhead into your production costs to get a true cost at the batch level?
Having access to this data offers the opportunity to highlight high-performing brands as well as weed out underperforming brands or recipes.
How can you get your ‘true’ cost of doing business and identify accurate profit margins? In many organizations, accountants do not have direct access to production data.
Using a variety of workarounds to cut and paste data without the corresponding details, you can effectively reconcile periods but beyond this, the data holds little to no value. It can actually misrepresent the health of your organization and potentially inhibit future growth.
Without knowing the details of your manufacturing process, you are unable to get an accurate picture of the true cost incurred.
- Many organizations use inventory, quantifying what materials were used and reporting those costs.
- Others will take it a step further to allocate any additional across the board of all production runs.
But without a way to measure indirect cost associated with each production run, you’re unable to identify and highlight where your true profit lies within your product mix.
Having a clear view of your profit margins is key to your business’s strategic growth.
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By Vicinity Software,