Written by Bill Lannan
When was the last time you updated standard costs in VISUAL? Are you seeing large variances between your actual costs and your standard costs? Then it’s probably time to bring your standards up to date. Commodity prices, labor rates, manufacturing processes, and business operations are all changing constantly and more rapidly than ever before in today’s world.
The once-per-year review and update may no longer be sufficient if you want to properly price products and remain competitive in today’s environment. Accordingly, you may need to develop a different strategy and frequency for updating your standards. This requires a fair degree of judgement, effort, and discipline, but luckily, VISUAL provides some tools to help you.
In particular, VISUAL 8 provides a tool called “Recalculate Standard Costs” that helps you to analyze and evaluate prospective changes and then apply those changes as desired. This tool works in both Actual and Standard Cost environments. Along with the recalculation tool, VISUAL also provides tools to help you to reset your standards and implode them into your engineering masters so you can use the new cost standards going forward.
The Recalculate Standard Costs tool provides a historical review of receipts over a user defined period of time to calculate new unit costs for parts in your database. This powerful tool has the following features:
- You can select a single part, unrelated multiple parts, multiple product related parts, fabricated parts, purchased parts, or all parts in your database.
- You can select the date range (i.e. start and end date) for your study and/or use the latest receipt available.
- Information provided:
- Current Unit Cost (per current standard) versus New Unit Cost (as calculated from receipts history).
- Source or basis of the New Unit Cost.
- Total unit costs or the breakdown of the costs into material, labor, burden, and service categories.
- Output flexibility: You can output to view, send to a printer, or create a CSV file for further refinement and analysis.
So, if you haven’t updated standard costs in a while, you may want to plan a project to review, evaluate, and update your standard costs soon. If you need more information, training, or assistance, Synergy Resources is available to help. Please contact us today!
Written by Jack Hughes of Synergy
It is no surprise that actual costing is preferred over standard costing or average costing. The VISUAL help menu explains these choices under costing method.
Actual costing in VISUAL allows analysis not only of the gross profit of each order but the cost components (material/labor/burden/outside service) as well. This can be seen in the Gross Profit Report under the engineering /manufacturing menu. This enables throughput analysis as well as contribution analysis. As you may know, throughput is described as revenue less material and outside service cost.
The Gross Profit Report in an actual cost database provides accurate cost/revenue data (summary or detail) with 6 selection criteria as well as your desired range of ship dates.
Inventory/Cost of Sales is valued at FIFO (First in First out) unless the Customer Order or Purchase Order is linked to the Work Order which then results in specific costing.
The standard costs are always available as a benchmark for variance analysis and reporting. These can be seen in the Work Order Master Cost report also under the engineering/manufacturing menu.
Tracking your company’s true actual manufacturing cost is a great way to understand the issues and opportunities you have to reduce costs and generate more revenue and throughput.
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