Bill of Materials and Recipe Costing
Every SKU should have a documented recipe: input biomass or distillate quantity, packaging components, ancillary ingredients, direct labor minutes and machine time. When the recipe is maintained in the system, cost updates flow automatically as input prices move.
- SKU-level bill of materials with component costs
- Conversion ratios from input mass to finished units
- Packaging, labeling and compliance material costs
- Standard cost with periodic revaluation
Yield and Variance Analysis
Extraction yield is the dominant driver of unit cost. Comparing actual to expected yield by run, operator and equipment isolates whether a margin problem is procurement, process or maintenance. Variances should be explained, not simply absorbed into cost of sales.
Testing, Remediation and Failed Batches
Laboratory testing costs, retesting, remediation and destruction of failed lots need consistent treatment. We define which of those costs remain inventoriable and which are period costs, and we document the reasoning.
Wholesale Pricing Support
Manufacturers negotiating with retail partners need to know true landed cost per unit including packaging and compliance overhead. We build pricing models that show contribution by SKU and by channel.
Frequently Asked Questions
- Should manufacturers use standard costing or actual costing?
- Many operators use standard costing for operational speed and revalue to actual periodically. The important part is that variances are analyzed and the year-end inventory valuation reflects actual cost.
- How are failed or remediated batches treated?
- Treatment depends on the cause and whether the product retains value. The policy should be written, applied consistently and reconciled to destruction records in the tracking system.
- What drives most margin erosion in processing?
- Unmeasured yield loss, packaging cost creep, and labor time not captured against the correct production run.