Co-Products and By-Products in Discrete Manufacturing

You can plan and account the costs of co-products and by-products in a discrete manufacturing work definition and work order.

With the capability to yield multiple outputs from discrete work definitions, you can calculate the cost of your products to closely reflect your actual production process. This eliminates the need for any alternate configurations in the application, saving time and effort and increasing productivity. If you use the standard cost method to value your inventory, you can analyze manufacturing variances in Cost Accounting to identify scope of improvement in your production processes and make better decisions.

You can set the cost allocation factor for the additional products as either a fixed cost or apply a percentage of the total accumulated costs at that operation. If you've multiple work definitions for the product in the manufacturing plant, set the costing priority for your primary product and additional products to choose the appropriate work definition when rolling up the costs of your products.

Note: In discrete manufacturing work definitions with multiple outputs, the assumption is that the primary product is yielded after the completion of last operation.

When you run the Roll up Costs process, the standard costs of the primary product, co-products, and by-products are calculated based on the planned cost. If you specify the costing batch output size in your work definition, the Roll up Costs process will scale up (or down) the quantities of inputs (materials and resources) that are planned to be consumed on a variable basis.

The View Rolled-up Costs page provides the breakdown of the rolled-up costs.

To calculate the cost of products, the Roll up Costs process increments the cumulative cost as inputs are consumed and decrements the cumulative cost as outputs are yielded.

Cumulative Cost = Cumulative Extended Material Costs + Cumulative Extended Resource Costs + Cumulative Overhead Costs - Output Costs

Output Cost of Additional Product (with cost allocation percentage) = Cost Allocation Percentage * Cumulative Cost

Output Cost of Additional Product (with fixed cost) = Entered Unit Cost * Quantity Planned to be Yielded (scaled quantity)

Output Cost of Primary Product = Cumulative Cost at the End of Last Operation

Unit Cost of Product = (Output Cost + Overhead Cost) / Quantity to be Yielded (scaled quantity)

The unit cost of product, with the cost element, expense pool, and level information is available on the Standard Costs page. After you publish this standard cost, this cost is used to process product completion transactions in Cost Accounting.