Cost product BOM components example Excel spreadsheet.
The Cost product BOM (Bill of Materials) allows to obtain the expected calculation of the cost of a product incorporating those direct resources that we are going to consume such as raw materials, working hours, energy consumed, machine hours …
A very simple example of a Cost product BOM can be a “cooking recipe”, in the case of the example the Cost product BOM is divided into 2 sections, one for raw materials and another for working hours.
The basic information to make a Cost product BOM is usually, components, unit of measures, quantities, unit costs, total cost of the component and total cost of the product BOM …
The total cost obtained with this recipe is an expected cost, target cost or budgeted cost…. Based on experience and technical requirements, the Cost product BOM is elaborated.
Many companies use the Cost product BOM to calculate prices by applying a margin or percentage to the total cost or the final price to know the expected profitability of the product to be manufactured.
It must be taken into account that the reality regarding the Cost product BOM may be different, in a Cost product BOM budgeted or target costs are used, in real manufacturing that cost may vary.
Reasons why the cost of a real manufacture may vary with respect to the Cost product BOM:
1) Variation of the purchase cost: The purchase cost of the products can vary by many aspects.
2) Variation of the quantity used: It is assumed that in industrial companies with automated and controlled processes the quantities must be homogeneous and with a minimal variation, but there are companies that either due to the process or the nature of the product there may be significant variations in the consumed amount.
3) Substitution of one component for another: It may be the case that due to a shortage of product (stock break) or for some other reason, a component has to be replaced by another similar or with similar characteristics.
4) Variation in working time: In this section, there are always variations since people are not robots that work at a constant speed. The reasons for variations in time worked can be very broad.
If we can calculate the real cost of production or manufacturing later, it can be compared with the budgeted cost and make decisions such as adjusting the Cost product BOM to adjust sales prices, improve manufacturing processes, reduce purchase costs …
More information about Controlling Excel Tools
- Working Plan Excel spreadsheet
- Documents Management Free Excel Template M1
- RH Talent Box Grid Excel Template
- Best Finance Excel Templates for Controlling and Management
- Projects Costs Calculation and Control M3 Excel Template
- Direct Costing Free Excel Template
- Inventory Control and Dashboard Excel Template
- Free Excel Template Break Even Point Calculation
- Human Resources Excel Templates
- Excel Template Daily Sales Control
- How to know how much money your company will earn at the end of the year
- Hotels Excel Cost Calculation
- Employee Management Free Excel Download
- Excel Template Medical Centers Control
- Management Budget Control Easy Theory Difficult Implementation
- Excel Template Matrix for Decisions
- Actual Vs Budget Excel Templates
- Budgetary control System with Projections example
- Budget Control Excel YTD & FYForecast M15
- What is Contract Management Excel Template and download a spreadsheet
- The 5 Most Important Ways to Use Microsoft Excel at Work
- Balanced Scorecard M1 Excel Template
More Videos about Management Accounting
Industrial company financial manager
Dani is helping us to use ODOO more efficiently, we are rapidly leveling up with the ERP. It is also preparing us very useful analysis and control reports and outstanding management tools. Always available by phone or email, willing to help and collaborate in everything that is proposed. Very professional and fast work. A key service for our company.
Controlling Consultant
Controller ODOO ERP
Email: dani@cashtrainers.com