Production
Production costing and reports
How ERP Nexl works out what an item cost to make, what wastage and yield mean, what reaches your books, and the production reports and dashboard cards.
Average cost
Every item has one current cost, shown as its Purchase Price: the average of what the stock you hold cost you. It moves when stock comes in at a different cost:
- Purchases, when Update item cost from purchases (average cost) is on in Settings → Costing (the owner's setting; on for new companies).
- Production: what an order makes comes in at its production cost.
- Returned materials come back at the value they were issued at.
- Stock adjustments that add stock with a cost per unit.
- Revalue on a recipe, for items made by a recipe (owner only).
Materials are issued at their current cost and sales take it as their cost of goods, so the value of your stock and your books move together.
What an order costs
- Materials: each issue at the material's cost at the time, less what was returned.
- Plus extra costs: labour, electricity, overheads, job work.
- Less by-products: their value at current cost, or the fixed value set in the recipe.
- Shared between the main item and the co-products, by the co-products' cost shares or by quantity.
- Divided by the quantity made, to give each output's Unit cost.
The order's Estimated cost prices the main item the same way at the time it was planned. After completion the order shows the actual value and the difference; for a customer job, the margin is the agreed price less that actual value.
Wastage and yield
| Figure | What it means |
|---|---|
| Standard | What the recipe says the quantity made should have used, without wastage. |
| Expected wastage | The standard times the recipe's wastage percent. |
| Actual wastage | What was really used (issued less returned) minus the standard. |
| Yield | How much of the main item was made against the quantity planned, in percent: 19 made of 20 planned is 95%. |
Materials the recipe didn't list, and orders without a recipe, count entirely as extra use, with no percentage. Wastage is part of the cost of what was made; it is only a loss in the books when an order is cancelled and written off.
In your books
Every step posts to the ledger by itself; you never enter production journals. With the Accounting module you can see them; without it they are still kept, ready for the day you add it.
| Step | Entry |
|---|---|
| Issue materials | Work in Progress up, Inventory down. |
| Return materials | Inventory up, Work in Progress down. |
| Complete | Inventory up for what was made; Work in Progress down for the materials; the extra costs credited to their cost type's account (Production Costs Applied unless you chose another). |
| Cancel with a write-off | Production Losses up, Work in Progress down. |
| Revalue | Inventory up or down against Inventory Cost Variance. |
The accounts are 1210 Work in Progress, 5410 Production Losses, 5420 Inventory Cost Variance (small rounding differences land here) and 5430 Production Costs Applied.
Opening stock
Each item's Opening Quantity reaches the books by itself: its value posts to Inventory against Opening Balance Equity when you save the item, and again whenever you change it (see moving from another system). Without the Accounting module, if Inventory → Item ever shows Post your opening stock or Opening stock changed, the owner can click Post opening stock, choose the Opening date (the day before your first transaction) and click Post.
Production reports
Open Production → Production Reports and choose a Report. For a dated report, set From and To, then click Run. Click a row that names an order to open it; Print prints the report.
| Report | What it shows |
|---|---|
| Production orders | Every open order, plus the orders completed or cancelled between the dates, with their cost. |
| Production summary | What was produced between the dates: quantity, value, average unit cost, and for main products the quantity planned and the yield. |
| Material consumption | Materials issued less returned between the dates, and what they were made into. |
| Wastage | For orders completed between the dates: standard, expected and actual wastage per item made and material. |
| Job costs | Per completed order: materials, extra costs, by-product credit, total cost, the main product's value against the estimate, and the margin on the agreed price. |
| Labour and extra costs | Extra costs on completed orders, by cost type and employee. |
| Material shortages | What open orders still need against today's stock, and materials that would issue at no cost. |
| Margins | Items made by a recipe: today's cost, the recipe's estimate, the sale price and the margin. |
| Expiring batches | Batches expiring within the window you choose. |
| Work in progress check | What open orders hold in work in progress against the books. |
| Stock value by item | Each item's stock at its cost. |
On the dashboard
With the Production module, the dashboard adds: Production orders in progress, Produced this month (the value made), Materials short, Most wastage this month, Batches expiring in 7 days and Lowest yield this month.
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