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Product Costing
Carlsberg Serbia Group
Dragan Vjestica
20.09.2012.
Page 2
Product Costing, summary
o Company Carlsberg
o Standard Reports
o Accounting Principles
o Production overview
o Standard COGS – Elements
o Standard COGS - Budget Costing
Page 3
Company Carlsberg Serbia
-Founded 1847. in Copenhagen, Denmark by J.C. Jacobsen
-Name: by son of founder “Carl” and “berg” – hill; location of the brewery
-Have production in 45 countries
-“Pivara Celarevo” founded by Lazar Dundjerski in 1892.
-After II world war becomes government property
-From 1975. till 1980. bigger investments – capacity 1,2 HL brewhouse
-Cooperation with company Löwenbrau
-In September 2003. majority of shares buys company Carlsberg Breweries A/S
-Started high investments in all parts of the business but mainly in production
-Be a part of the
“PROBABLY THE BEST BEER COMPANY IN THE WORLD”
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Standard Reports – Profit & Loss
Page 5
Product Costing is method of calculating costs of goods sold per
product unit based on allocation of total production expenses.
Product Costing gives the possibility to understand product profitability
Standard Costs of Goods Sold (COGS) is budgeted production
costs per unit product multiplied by actual volume. Standard COGS is reference for further analyze of COS.
Cost of Sales (COS) is actual costs of producing and purchasing
goods or services. It is usually presented in the form:
Standard COGS
+ Variances
Costs of Sales
Standard Reports – Cost of Sales and Product
Costing
Page 6
Standard Reports – Cost of Sales
Page 7
The five Accounting Principles
1. Standard Cost Accounting
2. Full cost Principle
3. Indirect Production Overhead (IPO) in inventory
4. Practical capacity
5. Capitalization of returnable bottles & crates
The Product Cost five Accounting Principles
Page 8
1. Standard Cost Accounting
•A standard cost per SKU must be developed once a year as
part of the budget process
• Product cost standards should only be changed once a year
•Approved budget assumptions are used for product costing
• E.g. purchasing prices, line efficiencies, manning, std. losses
•Product cost are recorded as standard costs in actual booking
• Production variances to this standard are recorded (material variances,
usage variances labour, machine variances capacity variances and support
variances)
•Cost of Sales in Profit & Loss statement is related to sales
volume, except for variances which are related to production
volume
The five Accounting Principles
Page 9
2. Full cost Principle
• Full cost means that
•All production expenses are allocated to each single unit
produced
•The products absorb all budgeted production expenses
3. Indirect Production overhead (IPO)
• Product costs are used for inventory valuation
• Product costs include cost of support functions (IPO)
The five Accounting Principles
Page 10
4. Practical capacity
• Depreciation costs reflect capacity costs
• Capacity is by definition 8760 hours (24x365)
• Products are only charged for the capacity they actually use,
including planned stops and changeover.
• Cost of idle capacity is not absorbed by products
5. Capitalization of returnable bottles & crates
• Returnable bottles and crates (B&C) are considered fixed
assets and depreciated over useful lifetime.
The five Accounting Principles
Page 11
DC 2
DC 1
DC 3
BREWING CCT BBT PACKING WAREHOUSE
RAW MATERIALS CHEMICALS PACKING MATERIALS EMPTIES
BREW PLAN SALES FCST PACKING PLAN FILTRATION PLAN
Production Overview -
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Production overview - Organizational structure
P
RO
DU
CT
ION
Utilitie
s
Workshops
S
up
po
rt
Page 13
PRODUCT RELATED COST PROCESS RELATED COST
RAW MATERIALS
(BOM & COST CENTER)
PACKAGING MATERIALS
(BOM & COST CENTER)
UTILITIES
(VARIABLE & FIXED
COSTS)
LABOUR
(VARIABLE & FIXED
COSTS)
CONSUMABLES
(VARIABLE COSTS)
MAINTENANCE MACHINE
(VARIABLE & FIXED
COSTS)
CAPACITY
(FIXED COSTS)
SUPPORT
(FIXED COSTS)
COST OF PRODUCT
Standard COGS – cost component groups
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Standard COGS – Elements - BOM
Example: Bill of Material for Lav 05L
Page 15
Standard COGS – Elements – Master Recipe
Connecting production
resources with materials from
BOM :
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Standard COGS – Elements – Master Recipe
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Standard COGS – Elements – Master Recipe
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Standard COGS – Elements – Master Recipe
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Standard COGS – Budget Costing
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Standard COGS – Budget Costing
Example: Quantities of activities
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Standard COGS – Budget Costing
Cost allocation cycles
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Standard COGS – Budget Costing
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Standard COGS – Budget Costing
Upload Budget SAP
Product costing:
1. Prices of MATERIALS
– Raw materials
– Packaging materials
– TG (trading good)
2. BOM
– SFP (semi finished products)
– FP (finished products)
3. MASTER RECIEPE
– Resursi
– Sati rada
4. CC BUDGET
– Fiksni troškovi
– Varijabilni troškovi (Output, Qnt, KP06_VAR)
5. ALLOCATION KEYS
– Utillities (Output, Qnt(fix,var))
– Mechanical workshop (Output, Qnt(fix,var))
– Electrical workshop (Output, Qnt(fix,var))
6. CAPACITY
6. a) Enter Statistical Key Figure FTE
7. ALLOCATIONS
8. PC RUN
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