How are you calculating batch costs?
We’re capturing a rolling average for each inventory item, and using that as the basis for batch costing. In cases of bulk spirit use, the batch cost is reflective of the purchase cost entered when spirit is brought into the system.
Why an average? Why not FIFO/LIFO/something else?
After discussions with accounting professionals and distillers, we determined that inventory averages would provide the most accurate and useful data for batch costing, as spirit is so commonly blended that lot-based purchase prices become largely irrelevant.
What if I already have inventory in the system?
You may add a total inventory value to any existing inventory item via Item Actions – Edit Item. This is then used to determine the average unit cost of existing inventory, which will be adjusted as materials are received moving forward.
How do I account for freight?
We’ll be building out freight options in the future, but for now you have several options:
- Count freight as an operating expense. Enter the freight cost directly into Quickbooks, not DISTILL x 5.
- Divide freight by the number of weight units received. Divide the freight charged by the number of units received, then add that number to the per-unit cost of each material.
- Assign it to one inventory item. Divide the freight charged by the number of units of that material received, then add it to the per-unit cost of that material.
How are you dealing with aging/labor/overhead?
In short, we aren’t. Aging is a calculation that each distillery determines internally, so there is no universally-accepted way for us to account for spirit appreciation. We don’t require time keeping in Dx5, nor do we ask for depreciable asset values, so there’s no way for us to include labor or overhead.
Cool. What about reporting? Can I see my batch costs on operations reports?
Not yet, but it’s on the horizon. For now, inventory costing on inventory reports is much smarter, but we’re working on adding individual batch costs to all reporting going forward.
Do my existing batches get a value?
You can manually assign a cost to existing batches by selecting into each batch, then enter the cost through the edit function.
Are barrels included in batch costs?
Because barrels vary in use/reuse by distillery and are a depreciating asset, we’ve elected to leave them out of our batch costs. Potential workarounds include adding barrels as a recipe ingredient – contact Support if you’d like to learn more.
What happens when I take a loss?
It depends on the type of loss. If an entire batch is going down the drain, the whole batch value will dump. If you’re only logging a partial batch loss though, like on a bottling run, you won’t see a loss in batch cost. Instead, we just keep the value with the remaining active batch, making each drop of spirit just a little bit more valuable.
What if I recalibrate a batch?
Recalibrating a batch will not change the total value of the batch, so adjusting the volume will either increase or decrease the cost per wine gallon - you can absolutely adjust the cost after recalibrating, if needed.