Product Costing Model

McCormick Australia
Product Cost Planning
BOM

Material Costs $
•Raw Materials
•Packaging
•Semi Finished

-------------------------------------------

Production Costs $
Routing •Labour

Overhead Costs $
Depreciation $
Flow of costing values
Product Cost Planning – As Is

Jelly Routing

BOM
Labour Machine Depreciation
Packaging
Raw material
material

BOSCH501006

Batch size (Output) = 700 Trays

Input = 500 kg
Implied loss rate = 700 trays X 8 packs per tray X 0.085 = 476kg, therefore loss rate % = 500kg/476kg = 5%

Preweigh Operator = 1
Preweigh
Standard time = 0.86hr
ingredients

500 KG
Raw materials

Cone Blending operator = 1

Blending Blending Standard time = 0.86hr
machine Matcon
Standard blending time
11 blends in a shift = 9.5/11 = 0.863636 hours

Pack into 85gm sachet

Packing materials
Blend drop into Matcon

standard packing time = 1.273 hr

Aero Packer Packing Operator = 2
Matcon machine
 Product Cost Planning – As Is
AERO ORIG 85GM LEMON DELICIOUS Customer McCormick

Date 24/11/08 STD Costing 7

Reason Re-Costing Batch Size 700.00 TR Number of packs per TR 8.00 Net Qty per TR 0.68
501051 AC BOSCH501051 Annual Vol (cn) N/A Prod'n run size 8.00 Batches Volume per pack 0.09 KG KG Net per TR 0.68
AC Annual GSV ($) N/A Prod'n run duration 8.53 hours S.G. (1 when in KG/GM) 1.00
no effectivity date issues
2 column of Imported model ok 10 12 column of Imported model

Std Cost/ No of Qty per Total STD Actual Cost/ Actual % of Total Std Direct Cost
LR LABOUR 3 UOM Qty per TR STD Cost/KG Act Cost/KG
UOM People Batch Cost/TR UOM Cost/TR Cost per Batch
ABOP AERO BLENDING OPERATOR $ 47.4900 1.000 0.860 HR 0.0012 $ 0.0583 $ 47.4900 $ 0.0583 $ 0.086 2.57% $ 0.086 $ 40.84
AMOP AERO MACHINE OPERATOR $ 46.3200 1.000 2.546 HR 0.0036 $ 0.1685 $ 46.3200 $ 0.1685 $ 0.248 7.41% $ 0.248 $ 117.93
APWOP AERO PREWEIGH BLENDNG OPERATOR $ 44.8900 2.000 0.860 HR 0.0012 $ 0.0552 $ 44.8900 $ 0.0552 $ 0.081 2.43% $ 0.081 $ 38.61
4.266 0.0061 $ 0.2820 100.00% $ 0.2820 $ 0.415 12.40% $ 0.415 $ 156.54
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Std Cost Qty of Qty per Total STD Actual Cost/ Actual % of Total Std Depn STD Var Ohead Var Ohead Direct Cost per
PL PLANT AND COPACKING 2 UOM Qty per TR STD Cost/KG Act Cost/KG
Cost/TR Cost/TR Rate
Rate type
Batch
Depn/ UOM Machine Batch Cost/TR UOM Cost/TR Cost

EA901 BOSCH N0 1 ( EX GERMANY ) (52) $ 52.8883 1.000 1.273 HR 0.0018 $ 0.3686 $ 52.8900 $ 0.3686 $ 0.542 16.21% $ 0.542 $ 0.0962 $ 0.2724 149.8040 D $ 67.33
EA906 CONE BLENDER NO 1 500KG $ 45.4590 1.000 0.860 HR 0.0012 $ 0.2104 $ 45.4600 $ 0.2104 $ 0.309 9.25% $ 0.309 $ 0.0558 $ 0.1545 125.7911 D $ 39.09
Total 2.133 0.0030 $ 0.5790 100.00% $ 0.5790 $ 0.851 25.46% $ 0.851 $ 0.1520 $ 0.4270 $ 106.42
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Std Cost/ Qty per Total STD Actual Cost/ Actual % of Total Std Yeild - Qty of Direct Cost
PM PACKAGING 6 Qty per TR UOM Qty per TR STD Cost/KG Act Cost/KG Loss
UOM Batch Cost/TR UOM Cost/TR Cost Inners per 1 per Batch
L9987 LABEL 102X50MM WITH RIBBON $ 71.5050 0.0003 0.221 RL 0.0003 $ 0.0225 $ 71.5050 $ 0.0225 $ 0.033 0.99% $ 0.033 - 0.0000% $ 15.77
P2291C DISPLAY TRAY AERO 85G JELLY X8 $ 0.0480 1.0500 735.000 EA 1.0500 $ 0.0504 $ 0.0480 $ 0.0504 $ 0.074 2.22% $ 0.074 - 0.0000% $ 35.28
P2306 REWIND 190MM P/COATED 80GSM $ 3.7200 0.0156 10.920 KG 0.0156 $ 0.0580 $ 3.7200 $ 0.0580 $ 0.085 2.55% $ 0.085 - 0.0000% $ 40.62
P2342A SHRINK WRAP 290MM 40UM $ 4.6500 0.0043 3.010 KG 0.0043 $ 0.0200 $ 4.6500 $ 0.0200 $ 0.029 0.88% $ 0.029 - 0.0000% $ 14.00
P2804A CTN AERO ORIG LEMON 85GM $ 0.0273 8.1714 5,720.000 EA 8.1714 $ 0.2231 $ 0.0273 $ 0.2231 $ 0.328 9.81% $ 0.328 - 0.0000% $ 156.16
P833 LAYER PADS 1130 X 1130 $ 0.7717 0.0040
- 2.800 EA 0.0040 $
$ 0.0031
- $ 0.7717 $ 0.0031 $ 0.005 0.14% $ 0.005 - 0.0000% $ 2.16
Total 6,471.951 9.2456 $ 0.3771 100.00% $ 0.3771 $ 0.555 16.58% $ 0.555 $ 263.98
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Std Cost/ Qty per Total STD Actual Cost/ Actual % of Total Std Direct Cost
RM RAW MATERIALS 7 Qty/100 UOM Qty per TR STD Cost/KG Act Cost/KG
UOM Batch Cost/TR UOM Cost/TR Cost per Batch
R1603 SUGAR CASTOR BULK $ 0.6870 88.46432 442.311 KG 0.6319 $ 0.4341 $ 0.6800 $ 0.4297 $ 0.638 19.09% $ 0.632 $ 303.87
R1612 GELATINE 20FN $ 7.4800 7.80559 39.027 KG 0.0558 $ 0.4170 $ 7.9500 $ 0.4432 $ 0.613 18.34% $ 0.652 $ 291.92
R1655 COLOUR TARTRAZINE YELLOW POINT $ 10.9000 0.03000 0.150 KG 0.0002 $ 0.0023 $ 10.9000 $ 0.0023 $ 0.003 0.10% $ 0.003 $ 1.64
R1722 FLAV LEMON 610028A $ 34.8000 0.50001 2.500 KG 0.0036 $ 0.1243 $ 34.8000 $ 0.1243 $ 0.183 5.47% $ 0.183 $ 87.00
R1809 FUMARIC ACID $ 3.0000 2.00005 10.000 KG 0.0143 $ 0.0429 $ 3.0000 $ 0.0429 $ 0.063 1.88% $ 0.063 $ 30.00
R1814 PROPYLENE GLYCOL $ 3.2000 0.20000 1.000 KG 0.0014 $ 0.0046 $ 3.2000 $ 0.0046 $ 0.007 0.20% $ 0.007 $ 3.20
R1815 SODIUM CITRATE GRANULAR $ 1.5200 1.00002 5.000 KG 0.0071 $ 0.0109 $ 1.5200 $ 0.0109 $ 0.016 0.48% $ 0.016 $ 7.60
Total 100.00000 499.988 KG 0.7143 $ 1.0360 102.10% $ 1.0578 $ 1.524 45.56% $ 1.556 $ -

Std Cost/ Qty per Total STD Actual Cost/ Actual % of Total Std Direct Cost
WI WORK IN PROCESS 0 Qty/100 UOM Qty per TR STD Cost/KG Act Cost/KG
UOM Batch Cost/TR UOM Cost/TR Cost per Batch
$ - - - - $ - $ - $ - 0.00% $ -

$ - - - $ - $ - $ - 0.00% $ -
Total - - KG - $ - 100.00% $ - $ - 0.00% $ - $ -

Total Materials and Derived Loss rate 5.039% 499.988 KG TOTALS $ 2.2741 $ 2.2959 $ 3.34 100.00% $ 3.38
Cost Comparison vs 501051
UPPER LEVEL LOWER LEVELS TOTAL LEVELS AERO ORIG 85GM LEMON DELICIOUS
VARIABLE DIRECT VARIABLE TOTAL STD DIRECT VARIABLE TOTAL STD Total Std Cost
% of Total Std Cost
CLASS DIRECT COST O/H TOTAL COST COST O/H COST COST O/H COST TOTAL ACT COST 501051 Difference
Raws $ 1.0360 $ 1.0360 $ - $ - $ 1.0360 $ - $ 1.0360 45.56% $ 1.0578 $ 1.0360 $ 0.0000 0.00%
Packaging $ 0.3771 $ 0.3771 $ - $ - $ 0.3771 $ - $ 0.3771 16.58% $ 0.3771 $ 0.3803 $ (0.0032) -0.84%
Labour $ 0.2820 $ 0.2820 $ - $ - $ 0.2820 $ - $ 0.2820 12.40% $ 0.2820 $ 0.2820 $ 0.0000 0.00%
Plant $ 0.1520 $ 0.4270 $ 0.5790 $ - $ - $ - $ 0.1520 $ 0.4270 $ 0.5790 25.46% $ 0.5790 $ 0.5790 $ 0.0000 0.00%

Total Cost $ 1.8472 $ 0.4270 $ 2.2741 $ - $ - $ - $ 1.8472 $ 0.4270 $ 2.274 100.00% $ 2.296 $ 2.277 $ (0.003) -0.14%
Costing model mapping in SAP
Jelly Cost Center

Blender Blender

Work center ConeMC

Packing
Packing Packing
Jelly Lite Bartelt
Bosch 1 Bosch 2
(Work Center)

Work center

Cost Center Jelly

 SAP Costing Model – Design Decisions

•Activity Types
•Overhead
• No separate process for O/H allocations
• Specify that record must be archived
• Archive the transaction data attached to that master record
•Will have both Fixed & Variable

•Labour
• Reduced labour rates
•Operator (combines )
•Packer (combines )

•Depreciation
• Individual Rate per Machine

•No WIP
• Confirmation during Backflush (to be further ratified with OneArch)

•No Setup Activity Type

•Note - Manual calculation of Activity rates in Excel
 SAP Costing Model – Design Decisions

•Activity Types
•New cost component structure required

•Cost Centres
• Jelly
• Wet
• Dry
• Blend, Grind & Bag

•Scrap
•Will use a combination of component & assembly scrap
•Will be explicitly reported in the BOM
Product costing flow

Create cost
Cost Estimate Analysis Update
estimate

Materials
Costing Run selection and Costing Analysis Update
BOM explosion

Reporting Cost reports

 Costing Run

Period x Period x+1

Create Selection Proceed Mark Release

Costing Run of Materials/ Costing Run Costing Run Costing Run
• Name Quantity
• Dates Calculation Update Update
Structure
• Parameters of Costs Future Price Actual Price

Valuation Type Level