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SOFTWARE Q&A
– WITH Q'S FROM YOU, OUR CLIENTS!
Send us
your questions/problems–be they short, long, simple or downright
frustratin'!–about SeRVware
and we'll handle them right "on the air" for the benefit of all. This month's question came from a Minnesota pork producer.
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Q.
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We’re running e.CLIPSE
and need some guidelines for cost centers. If we
purchase general farrowing supplies and don't care exactly what
ends up in which building, is it better to put that in "General
Hogs" or create another cost center called "General Hogs-Farrowing"? The
same would apply for Nursery & Finishing.
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| a.
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Here are some general guidelines for determining
how to treat indirect expenses such as supplies:
| (1) |
Are
the supplies being used by group or non-group
production centers?
You can post expenses directly
to a non-group (F) farrowing center. This
is normally what you'll do with semen and breeding supplies. You
can also do it with other supplies. With
group (G) centers, you must post indirect expenses through
some type of consolidating (N) cost center.
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| (2) |
Is
there a lowest common denominator (cost driver) for
allocating to the production centers that closely matches
the way those costs are absorbed?
This is challenging when different
production stages are involved, but it can be done. For
example, use Quantity In/Out if the cost is absorbed
at the same rate, regardless of stage of production. Use
Animal Days or Weight Produced if you want to "weight"
the cost more heavily toward latter stages. If
no lowest common denominator can be found, then separate
"cost pools" need to be created for supplies
by stage. |
| (3) |
How
much work will it be to assign invoices when they are
first posted, vs. allocating them later?
For example, an invoice for
supplies could a) be assigned directly to farrowing
farms, b) split between "General Farrowing,"
"General Nursery" and "General Finishing"
or c) posted directly to "General Hogs."
Option a) requires the most
initial effort but no other steps since costs are already
allocated to production centers.
Option b) requires a little
more effort and thought to initially post but automatically
allocates to corresponding production centers.
Option c) is a "no-brainer"
transaction, but requires a follow-up manual journal
entry or "LCD" cost driver described in #2
above. |
| (4) |
Are
those supply costs "material?"
Accountants consider an item
material if its omission or misstatement is likely to
influence the judgment of a reasonable person. Conversely,
items may be omitted if they are too insignificant to
affect users’ decision. The more immaterial
the cost, the more appropriate to assign it through
"General Hogs." |
| (5) |
Who
manages those costs?
If these supplies are a uniform,
"top-down" allocation to all sites, then simply
drop them into "General Hogs" or "General
Farrowing/Nursery/Finishing" centers and let the
system spread the costs at a standard rate. However,
if these costs vary materially and are controllable
at the site level, then post directly to the production
centers. |
Call in your questions (800.437.7638) or e-mail them
to support@fbssystems.com.
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Remember, detailed
coding is only useful if used to make management decisions.
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CLIENT'S CORNER
• Welcome!
New client Burkey Farms, Dorchester, NE.
• In the News!
Dorthy
Lecher, HR Director at Prema-Lean Pork, Greensburg, IN, discusses
employee burnout in "Burnout—Dousing the Flame," in the
July, 2003, issue of Pork. Management consultant Don Tyler,
also offered suggestions for preventing burnout.
Click on this link to read the article:
http://www.porkmag.com/news_editorial.asp?pgID=728&ed_id=2036
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