Stock costing guide

There are various aspects to understanding stock costing, which are covered in the sections below.

Standard Enterprise Costing Models

The system automatically maintains a set of unit costs for the overall company, and a set for each location. Each of these sets consists of:

Each unit cost is split into a material and a non material element.

Standard Enterprise Lot Control

The system allows stock to be controlled at individual receipt batch level or at a higher total store level. This is defined by stock group.
Where stock is controlled at lot level, the system retains an actual receipt cost for each lot, in addition to the cost models above.

Milling Costing Models

The Average cost model has been modified slightly to cover some specific milling requirements, this is referred to as Weighted Average Cost (WAC)
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The Stock Control System has been configured for milling to use the following cost models when valuing and processing stock records (all at Location rather than Company level):

The remix standard cost is automatically set by a system background process each month.
The new standard cost is set as the lowest WAC found for a specified low grade flour, eg. biscuit.
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The wheatfeed standard cost is also automatically set by a monthly system background process. The new cost is the weighted average of selling prices for all outstanding wheatfeed sales contracts, which are due for despatch in the coming month.
Both the Timed Stock Valuation Report and the Monthly Stock Journals automatically use the appropriate costing models when valuing stock.
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The Part/Stock tab shows these costs, with the relevant cost model used shown at the base of the screen.
Although milling only use these costing models, the Enterprise system continues to store and maintain all of the costing models.

Milling Lot Control

All bulk stock is controlled at lot level, with stock lots moved/used on an automatic FIFO basis.
Non bulk stock is controlled at store level within Stock Control but at a lower pallet level within Warehouse Management.

Stock Movement Costs

All movements into the system are at actual cost (purchase or production).
All movements within and out of the system are at WAC, Standard or Lot cost (as defined above).
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​Note: The Part/History tab shows these individual movement costs, and not the stock cost.

Negative Stocks – Costing Issues

The Stock Control system is configured to permit negative stock. This has an impact on WAC costs. Although the stock quantity may be negative, the WAC must not be (may be zero but not negative).
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When processing a stock movement outward, for a WAC part with zero or negative stock, the system will use the last WAC used, or if none, the current cost, or if that is zero, the standard cost.
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The same rule applies for posting a stock adjustment inwards (count or manual) against a WAC part with zero or existing stock.
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​Note: Weighted Average Cost can be zero (if zero or negative quantity) but not negative value.

Wheat Costs – Contract

Purchase contract costs are defined by individual cost elements, with each element marked as either being included in the contract price (i.e payable to the supplier) or not (i.e not payable but still part of the stock cost).
These costs elements may be specified in different currencies, even within one contract. Where an element is specified in currency, a foreign exchange purchase rate may be defined against the cost (this impacts on the stock receipt value below).
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​Note: The total unit cost, split by contract and non contract, is displayed in the contract currency on the Contract/Header tab.

Wheat Costs – Vessel Purchase Receipt

At contract receipt (vessel discharge), the cost of the stock lot is calculated as the sum of the following, each of which is logged on the Wheat Cost Audit display.

Note: The Wheat Cost Audit is displayed on the Wheat Parcel/Cost Audit tab and on the Part/History/Milling tab (RHM option).

Wheat Costs – Mill Transfer Receipt

As wheat loads are transferred from the remote store and received at the mill (weighbridge or conveyor), the cost of the stock lot is calculated as :

These transfer costs are also logged on the Wheat Cost Audit.

Wheat Costs – Weighbridge Purchase Receipt

At contract weighbridge receipt, the cost of the stock lot is calculated as the sum of the following, each of which is logged on the Wheat Cost Audit display.

These transfer costs are also logged on the Wheat Cost Audit.

Flour Costs – Milling Production

Before calculating product costs, the conditioned wheat material quantities are adjusted to account for moisture changes and screenings.
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The material costs are issued at the appropriate cost :

The product costs are calculated as :

Flour Costs – Blending Production

The material costs are issued at the appropriate cost :

The product costs are calculated as :

Wheat Blend Costs – Production

The material costs are issued at the appropriate cost:

The product costs are calculated as :

For each pallet of stock recorded into the warehouse, the stock movements are posted and costed as follows:

Stock Overhead Costs

Overhead costs are simply defined as a cost per tonne to produce bulk, and a cost per tonne to produce bagged product. These overheads are defined by sales group. They are automatically calculated by reported by both the Timed Stock Valuation Report and the Monthly Stock Journals.