What is Cost Weight?
The cost weight determines how much one unit of a product is worth compared to one unit of the other finished products in the same recipe.
All produced goods in a recipe have a cost weight of 100 by default. tracezilla then allocates the cost by quantity alone, and every unit gets the same value.
An example: a production run consumes whole fish worth DKK 100 and yields
1 kg of sellable fish fillets
1 kg of trimmings to be used for cat food
With a cost weight of 100 on both products, each finished product is worth DKK 50. That rarely matches reality, where the fish fillet is worth more than what becomes cat food.
If you set the weights to 90 and 10, one kg of the first product is valued nine times higher than one kg of the second. Only the ratio between the numbers counts: 90 to 10 gives exactly the same allocation as 9 to 1 or 900 to 100.
The cost weight is not a percentage of the total cost. A weight of 90 does not mean that the product gets 90 % of the cost. How large a share each product gets depends both on the cost weight and on how much of each product the production run yields. See the section How tracezilla calculates the allocation.
You set the cost weight per produced product on the recipe, not per production order. The weight therefore applies to every production order that uses the same recipe.
Set the cost weight on the recipe
In this example, the recipe Salmon fillet yields two finished products per recipe unit:
1,000 kg 2043: Salmon fillet, frozen (main product)
0,430 kg 6002: By-product for cat food (by-product)
The main product is to have a cost weight of 90, and the by-product a weight of 10.
Open the recipe.
Click on the box to the right under the heading One Recipe Unit Produces. The Update End Product dialogue opens.
On the Basic Settings tab, check that the Auto-Create and -Adjust Recipecheckbox is ticked.
Tick on the main product only. A by-product such as cat food can appear as yield in many different recipes, and the setting should only control the recipe where the product is the main product.
Go to the Advanced tab.
Enter 90 in the Cost Weight field.
Click Save.
Click on the bow to the right og the name of the by-product
On the Basic Settings tab, check that the Auto-Create and -Adjust Recipe checkbox is not ticked.
Go to the Advanced tab.
Enter 10 in the Cost Weight field.
Click Save
How tracezilla calculates the allocation
The example is based on a purchase of
1,43 kg of salmon at DKK 250,00 per kg
1 bag at DKK 5,00
The total cost is 357,50 + 5,00 = DKK 362,50.
The production run consumes one recipe unit and yields
1,000 kg of 2043: Salmon fillet, frozen with a cost weight of 90
0,430 kg of 6002: By-product for cat food with a cost weight of 10
Step 1. tracezilla multiplies the quantity by the cost weight for each product.
Product | Calculation | Weighted quantity |
2043: Salmon fillet, frozen | 1,000 kg × 90 | 90 |
6002: By-product for cat food | 0,430 kg × 10 | 4,3 |
Total |
| 94,3 |
Step 2. tracezilla divides the total cost by the sum.
362,50 / 94,3 = DKK 3,8441 per weight unit
Step 3. tracezilla multiplies back to find the amount for each product.
Product | Calculation | Cost | Per kg |
2043: Salmon fillet, frozen | 90 × 3,8441 | DKK 345,97 | DKK 345,97 |
6002: By-product for cat food | 4,3 × 3,8441 | DKK 16,53 | DKK 38,44 |
Total |
| DKK 362,50 |
|
The two amounts add up to DKK 362,50. The entire cost is allocated regardless of which cost weights you choose — the weights only decide how it is split.
Note that the salmon fillet gets 95 % of the DKK 362,50, not 90 %. That is because the production run yields 1 kg of salmon fillet against only 0,430 kg of by-product. The ratio between the value per kg, on the other hand, is exactly nine to one: 345,97 against 38,44.
The same calculation with the default weight of 100 on both products would have given DKK 253,50 to the salmon fillet and DKK 109,00 to the by-product — that is, DKK 253,50 per kg for both.
Check the result on the lot
Once the production run is complete, you can read the allocated cost on each individual lot.
Open the lot.
Find the valuation heading.
Read the Expected Cost of Goods field. If you work with actual costs, read the [Actual Cost of Goods field instead.
On stock shows the value of what is on the lot right now, not the share from a single production run. If the same lot receives yield from several production runs, the amount and the price per kg become a weighted average of them.
How the cost weight works when the by-product is not in the recipe
The cost weight only applies to the products listed in the recipe. If you add a finished product directly to the production order without it being listed under One Recipe Unit Produces in the recipe, it gets no cost and therefore no cost price either.
An example:
The recipe specifies 120 kg of whole salmon, and the 120 kg cost DKK 12.000 to purchase.
The production run yields 100 kg of salmon fillet and a further 20 kg of by-product, which is not listed in the recipe.
The by-product gets the value DKK 0, and the entire amount of DKK 12.000 is placed on the salmon fillet, that is DKK 120 per kg.
If you want the by-product to have a value, add it as a finished product in the recipe and give it a cost weight.
How the cost is allocated for a raw material that is not in the recipe
If you add a raw material directly to the production order without it being listed in the recipe, tracezilla allocates the cost of that raw material across all finished products on the production order. The allocation follows the weight of the products, and therefore not the cost weight.
Add expected costs and overhead to the recipe
You can add expected costs to the recipe as budget posts. This could be production costs for production at an external manufacturer, or freight to and from the production site.
Do not add expected costs for the SKUs that are part of the recipe, for example packaging. tracezilla already includes those costs.
Click Add Budget Post.
Optionally enter a text in the Memo field.
Select a Category from the list.
Tick This is overhead if the amount is also to be included in the actual costs.
Tick This is fixed if the amount is a one-off, for example freight. The amount is then included only once, no matter how many recipe units you produce.
Enter the cost amount per recipe unit. If the budget post is fixed, enter the total amount of the cost instead.
Optionally assign one or more tags.
Click Save.
tracezilla allocates budget posts from the recipe by the cost weight, in the same way as the raw materials in the recipe.
tracezilla has two types of cost price calculation: expected and actual. If you mark a budget post as overhead, it is included in both. Overhead is relevant if you produce in-house and want to include costs such as cleaning of equipment, start-up and labour, without receiving an invoice for them. Read more about how tracezilla calculates cost prices.
Add budget posts directly to the production order
You can also place budget posts directly on the production order instead of on the recipe.
Budget posts on the production order are not allocated by the cost weight, but by the weight of the finished products.
In the dialogue, you can use Restrict to the following inbound order lines to choose which finished products the cost is placed on. If you tick only one finished product, it carries the entire cost. If you tick several, the cost is allocated between them by weight.
Add a unit price to the lot
You can enter a unit price on the finished product in the Update Lot dialogue.
The price is added on top of the cost price that tracezilla calculates from raw materials, packaging and any budget posts. The amount is tied solely to the lot you enter it on and does not affect the other finished products on the production order.