Batch costings & WIP value
Costs in Breww are calculated by looking at the total volume that was successfully packaged, transferred or merged into another batch and allocating the total cost amongst those actions proportionally. Costs "trickle-down" the batch, only affecting actions that occurred after the point at which the cost was added and affecting each action below it proportionally based on the total volume successfully used.
For example, take a 1,000L batch with a total cost added at the beginning of Β£1,000, where the following happened:
- 350L was packaged into kegs
- 264L was packaged into 440ml cans
- 336L was merged into another batch
- and 50L was lost.
In this case, the total volume successfully used was 950L. This means that each successful action receives the following cost:
- The keg packaging receives (350L / 950L) Γ Β£1,000 = Β£368.4211
- The 440ml can packaging receives (264L / 950L) ΓΒ£1,000 = Β£277.8947
- The cost carried through to the batch merged into is (336L / 950L) Γ Β£1,000 = Β£353.6842
This method means that no cost is unaccounted for, and all costs end up flowing through to a packaged product. The "trickle-down" method also means that if a batch is split between two vessels, costs added afterwards to only one vessel will only affect actions done from that vessel. Costs added directly to each packaging only affect the cost of that packaging.
We feel batch costs are easier to understand using a flowchart, so at any time, you can see exactly how costs have flowed through a batch using its "Batch flowchart", like the one below:
It's worth noting that as costs flow based on volume successfully used. If you were to make a batch (the "parent batch") of 1,000L at a cost of Β£1,000, then merge 200L of this out into another batch (the "child batch"), initially all Β£1,000 would be transferred to the child batch, even though only 20% of the volume was transferred. This is because there are not yet any other "successful" actions on the parent batch. Whilst this might seem high at first, when (for example), 700L of the remaining 800L are packaged from the parent batch, the costs would be re-evaluated for you automatically. The new total successful volume of the parent batch is 90% of the original volume, with approx 22% of the cost moving to the child batch (approx Β£220) and the remaining approx Β£780 would be attributed to the 800L of packaged products on the parent batch.
The WIP value of batches and final packaged products is also calculated using the "trickle-down" method outlined above. However, there is a key difference.
When allocating the WIP value to pass on to each action below, instead of distributing it based on the successful total volume like costs, Breww will distribute it based on the cost per litre.
Read more about valuing beer stock in Breww: Stock value & wastageο»Ώ.