Costing Sample

7/28/2019 Costing Sample

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Excel Skills | Product Costing TemplateInstructions

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This template enables users to compile product costings for all the manufactured products that are produced by a business.The product costings are based on the purchase prices that are entered for all bought-in stock items and the bills of material

(“recipes”) that are compiled for each manufactured product. The template includes a detailed product cost review sheet,

what-if cost calculations for cost analysis purposes and quantity forecast calculations that can be used for requirements

planning or stock usage measurement. The unique design of this template enables users to create an integrated costing

model for all manufactured products.

The following sheets are included in the template:

StockCode - create unique stock codes for all bought-in and manufactured products on this sheet. The product costs and

what-if costs of all stock items are calculated based on the purchase prices of bought-in products that are entered on this

sheet and the bills of material that are linked to the manufactured products on the BOM sheet. The forecast quantities are

calculated based on the finished product quantities that are entered on the Forecast sheet.

BOM - link each manufactured product to the appropriate stock components on this sheet. All the product costings of

manufactured products are calculated based on the components that have been linked to the appropriate product code on

this sheet.

Costing - view a detailed product costing for any manufactured product by selecting the appropriate stock code from the list

box in cell A4. A comparison between the product costing and the what-if costing is also included on this sheet. Aside from

selecting the appropriate stock code, this sheet requires no user input.

Forecast - enter the finished goods quantities that should be used in order to calculate a requirements planning forecast.

The calculations on this sheet can be used for requirements planning or stock usage measurement purposes. The bought-in

stock quantity forecast that is calculated is included on the StockCode sheet.

Margins - this sheet includes a comprehensive analysis of selling prices, product costs, what-if costs and gross profit

amounts and percentages.

Stock Codes

The first step in customizing the template for your business is to create a unique stock code for each stock component and

finished (manufactured) product on the StockCode sheet. Stock components can only be linked to a manufactured product if

a stock code has been created for the appropriate stock item.

A stock code convention that makes sense in the context of your business should be used and the stock code convention

should make it easy to identify stock items based on the stock code that is assigned to each stock item. The template can

accommodate any stock code convention but we suggest using a combination of letters and numbers. In our example, we

have used a combination of four numbers and three letters for finished products and a combination of two letters and two

numbers for bought-in and intermediate stock items.

Note: The two letters that are used in the bought-in and intermediate products assists users in identifying the type of stock -

for example, RM refers to raw materials, LB refers to labour and SD refers to intermediate products. Note that even thoughlabour is not actually a stock item, we also assign a stock code to labour cost in order to include this type of direct cost in the

product costings. The same principle can be applied in order to include other direct costs like overheads or even distribution

costs in the product costings.

Once you have decided on a stock code convention, you can create a unique stock code for each stock item that should be

included in the product costings. The StockCode sheet includes the following columns:

Stock Code - enter a unique stock code in accordance with the stock code convention that is suitable for your type of

business.

Description - enter a description of the stock item. This description should enable users to easily distinguish between stockitems.

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Purchase Price - the most important aspect of the purchase price is that it should be in the same unit of measure as the unit

of measure that is specified in the UOM column. If a stock component is ordered from a supplier in another unit of measure,

the purchase price should be converted to the unit of measure that is specified in the UOM column. Purchase prices should

be entered excluding sales tax if the sales tax amounts can be claimed back from the appropriate tax authorities.







What-If Cost - the what-if purchase price should be entered in this column. This column forms part of the what-if costingswhich enable users to measure the sensitivity of product costings to component purchase price fluctuations. Refer to the

What-If Costs section of these instructions for more information on the what-if cost analysis feature.

Note: All the columns on the StockCode sheet with a yellow column heading require user input. The columns with a light

blue column heading contain formulas that should be copied from one of the existing rows for all new stock codes that are

added to the sheet.

Error Code - the formulas in this column display an error code if there is a problem with the data that has been entered in

any of the user input columns. This column should therefore be blank if all user input has been entered correctly. If any error

codes are ref lected in this column, the errors should be investigated and rectif ied in order to ensure that all template

calculations remain accurate. Refer to the Error Codes section of these instructions for guidance on how to correct the

appropriate user input errors.

Product Type - this column indicates whether the stock code relates to a stock item that is bought-in from a supplier or to a

product that is manufactured. A product costing should be compiled for all manufactured products by linking the

manufactured product and its components on the BOM sheet. The formula that has been entered in this column therefore

checks whether the stock code is included in column A on the BOM sheet and if so, identifies the product as a manufactured

product. Alternatively, the product is deemed to be a bought-in product.

Product Cost - this column contains the product cost of each stock code. If a product is classified as a bought-in stock item,

the product cost equals the purchase price that is specified in column D. If the product is classified as a manufactured

product, the product cost is calculated based on the components that have been linked to the product on the BOM sheet and

the appropriate purchase prices, input quantities and yields of the linked components. The Product Cost column therefore

contains the product costs of all stock items.

What-If Cost - this column contains the what-if costs of each stock code. The what-if costs are calculated on the same basis

as the product costs, but the what-if costs in column E are used instead of the purchase prices in column D for all stock

components. The input quantities and yields of all the components that have been linked to the manufactured stock items on

the BOM sheet are exactly the same. Refer to the What-If Costs section of the instructions for more information on the

calculation of what-if costs.

Quantity Forecast - the formulas in this column calculate the stock quantities that are required in order to produce thefinished goods quantities that are entered on the Forecast sheet. Refer to the Quantity Forecast section of these instructions

for guidance on how the forecast quantities are calculated.

Value Forecast - the value forecast is calculated by multiplying the quantity forecast by the stock purchase prices of the

appropriate bought-in stock items in column D.

What-if Value Forecast - the what-if value forecast is calculated by multiplying the quantity forecast by the what-if stock

purchase prices of the appropriate bought-in stock items in column E.

Note: Purchase prices (in column D) and what-if prices (in column E) should not be entered for manufactured products

because the product costings of these stock items are determined based on the purchase prices and what-if prices of thecomponents that have been linked to the manufactured products. If you enter a purchase price or what-if price for a

manufactured stock item, the input will have no effect on the costs that are calculated.

Note: We recommend that you review all bought-in stock items on the StockCode sheet in order to ensure that no

manufactured products are classified as bought-in stock items. If a manufactured product is incorrectly classified as a

bought-in product, it means that no components have been linked to the appropriate product on the BOM sheet. Once you

add the appropriate components to the BOM sheet, the stock code will be automatically be classified as a manufactured

product.

Note: All the stock codes that are created on the StockCode sheet should form part of a continuous cell range otherwise all

the template calculations may not be accurate No blank rows should therefore be included between any of the rows that







The purpose of the BOM sheet is to create a link between stock components and manufactured products. This isaccomplished by entering the appropriate stock code of the manufactured product in column A and entering the stock code

of the appropriate component in column B. Multiple stock components can be added to a single manufactured product in

order to create a product costing which consists of multiple stock components.







Note: Columns A and B both contain list boxes that include all the stock codes that have been created on the StockCodesheet. You therefore need to create a stock code for each manufactured or component product before you will be able to

select the appropriate stock code from the list boxes in these columns.

Note: All the columns on the BOM sheet with a yellow column heading require user input. The columns with a light blue

column heading contain formulas that should be copied from one of the existing rows for all the components that are entered

on this sheet.

The following user input is required in the columns with yellow column headings:

Product Stock Code - the stock code of the manufactured product to which the stock component should be added needs to

be selected from the list box in this column. The list box includes all the stock codes that have been created on the

StockCode sheet. The product stock code should be repeated for all the components that are used in the manufacturing

process. For example, if 10 components are required in order to produce a particular manufactured product, you need to

add 10 different component stock codes in column B in 10 separate rows and repeat the product stock code in column A in

each of these rows. All 10 component stock codes will then be linked to the same manufactured product and will be included

in the same product costing.

Note: Components are listed on the product costing in the same order in which they appear on the BOM sheet. This means

that even though all components do not need to be grouped together on the BOM sheet (by the product stock code), theorder in which they are entered or sorted will determine the order in which they appear in the costing. We therefore

recommend that you always sort the data on the BOM sheet by the product code in column A and the component code in

column B after making changes to the BOM sheet. By sorting the data, the components will always be listed on the product

costings in a consistent order.

Component Stock Code - a component stock code needs to be selected from the list box in column B for each component

that is used in manufacturing the product which has been selected in column A. The product costings that are produced by

this template accommodate a maximum number of 30 components per manufactured product. The cost of a manufacturedproduct is calculated based on the costs of all the components that have been linked to the product on the BOM sheet.

Note: A very efficient method of adding components to a manufactured product is by copying the components from a similar

product, selecting the appropriate new product code from the list box in column A and editing the input quantities and yields

of all the components. This method will however only be efficient if components have previously been added to a similar

manufactured product on the BOM sheet.

Input Quantity - the input quantity of the stock component that is used in the manufacturing process should be entered in

column C. This quantity should be entered in the same unit of measure that is specified for the particular stock code on theStockCode sheet (the component UOM is listed in column I).

Note: The unit of measure (UOM) of the manufactured product is listed in column G. If the unit of measure of the

manufactured product is "Units", the input quantity of the component should be sufficient in order to produce 1 unit of the

manufactured product but if the unit of measure of the manufactured product is for example "Dozen", the input quantity that

is entered should be sufficient in order to produce 12 units of the manufactured product.

Note: The yield basis should also be taken into account when determining the appropriate component input quantity. If the

yield that is entered in column D is based on an Input basis, the component quantity that is added at the beginning of themanufacturing process should be entered in column C. If however the yield is based on an Output basis, the component

quantity that remains at the end of the manufacturing process should be entered in column C This is because the input







Note: You may also want to consider entering a calculation in the input quantity column because this approach may make it

easier to determine how the input quantity has been calculated (if a calculation has been necessary). For example: if the

component unit of measure is dozen and only one unit is used in the manufactured product, the component quantity is

calculated by dividing 1 dozen by twelve. You therefore have the option of entering 0.083333 as the input quantity or you

can enter the formula "=1/12" in the input quantity column.







Yield - the component yield should be entered in column D as a percentage. The input quantity that is entered in column C is

divided by the yield in column D in order to determine the component quantity that is required in order to produce the

manufactured product. Yields can be determined on an Input or an Output basis - the difference between the two bases is

best explained by a definition and a few examples.

Definition: The inherent nature of a manufacturing process may result in the component quantity at the end of the

manufacturing process being less than the component quantity that is introduced at the start of the manufacturing process.

The quantity difference can be described as a yield loss. The Input basis refers to the component quantity that is introduced

at the start of the manufacturing process, while the Output basis refers to the component quantity which remains after the

manufacturing process has been completed.

Note: If there is a significant yield loss during the manufacturing process and the incorrect yield basis is used to determine

the yield that is entered in column D, the product costing of the manufactured product may be inaccurate. As we've

mentioned before, the yield basis also affects the input quantity that needs to be entered. It is therefore important to take the

yield basis into account when determining the component input quantity that needs to be entered in column C.

Example: If we use minced meat in the manufacturing of a beef burger, we have to decide on a yield basis before we can

determine the appropriate input quantity that should be specified. If our aim is to produce a 400g burger at the end of themanufacturing process, the quantity is based on the output after manufacturing. We may know that on average 500g of

minced meat is required in order to produce a 400g burger at the end of the manufacturing process - the 500g is therefore

the Input based quantity. The manufacturing yield can therefore be calculated as 400g divided by 500g which is 80%. If we

include a yield of 80% in the product costing, we need to include the output weight (400g) as the input quantity in the

costing. The meat component cost is therefore calculated by dividing the 400g by 80% thereby effectively including 500g of

meat in our beef burger product costing. If we use the Input basis in our product costing, an input quantity of 500g and yield

of 100% should be entered (assuming that there is no meat yield loss prior to the start of the manufacturing process).

Example: Our example beef burger includes one slice of onions. With this component, we are not really concerned about the

output weight because we have already decided that only one slice of onions will be included on our beef burger. The unit of

measure of the onions component is kilogram and we therefore need to calculate the input quantity of this component based

on how many slices are included in a kilogram of onions. The quantity that represents one slice then needs to be entered in

the Input Quantity column. In principle, we are calculating the input quantity based on the Input yield basis and the yield

therefore needs to be entered as 100%. We do however know that after the slicing process is completed, 5% of the onions

that we purchased do not end up as sliced onions and is therefore lost before the start of the manufacturing process. We

also need to take this yield loss into account in order to compile an accurate beef burger product costing. A yield of 95% is

therefore entered even though we used the Input basis in determining the appropriate component input quantity.

The BOM sheet also includes 22 columns with light blue column headings. These columns contain formulas that should be

copied for all the new components that are added to the BOM sheet. The purpose of each of these columns is as follows:

Error Code - the formulas in this column display an error code if there is a problem with the data that has been entered in

any of the user input columns. This column should therefore be blank if all user input has been entered correctly. If any error

codes are ref lected in this column, the errors should be investigated and rectif ied in order to ensure that all template

calculations remain accurate. Refer to the Error Codes section of these instructions for guidance on how to correct theappropriate user input errors.

Product Description Product UOM - these columns are included on the BOM sheet to enable users to view the







Component Type - this column reflects the type of component that has been selected in column B. If the component type is

"Bought-in", it means that the component is purchased from a supplier. If the component type is "Manufactured", it means

that the component is an intermediate product which needs to be manufactured.

Bought-In Price - if the component is a bought-in stock item, the purchase price of the component that is entered on the

StockCode sheet will be included in this column. If the component is a manufactured stock item, the bought-in price will be

nil and the component cost will be based on the calculations in the intermediate columns.







Bought-In Cost - the bought-in cost of components is calculated by multiplying the bought-in price of the component by the

input quantity in column C and dividing the result by the yield in column D.

Intermed Comp Cost - if the component that is selected in column B is a manufactured product, the component cost in this

column is determined based on the product cost of the intermediate product which is calculated in column O. Note that the

component cost is calculated as the sum of all the product costs of components that are linked to the intermediate product

on the BOM sheet. If the component is a bought-in product, the intermediate component cost of the product will be nil.

Intermed Prod Cost - the intermediate product costs of components are calculated by multiplying the intermediate

component cost of the component by the input quantity in column C and dividing the result by the yield in column D.

Product Cost - if the component is a bought-in product, the component product cost will be equal to the component bought-

in cost. If the component is an intermediate product, the component cost will be equal to the intermediate product cost. Note

that the product cost of the manufactured product that has been selected in column A will be equal to the sum of all the

component product costs that are calculated for the particular product in this column.

Bought-In WI Price - if the component is a bought-in stock item, the what-if price of the component that is entered on the

StockCode sheet will be included in this column. If the component is a manufactured stock item, the bought-in what-if price

will be nil and the component what-if cost will be based on the calculations in the intermediate columns.

Bought-In WI Cost - the bought-in what-if cost of components is calculated by multiplying the bought-in what-if price of the

component by the input quantity in column C and dividing the result by the yield in column D.

WI I/M Comp Cost - if the component that is selected in column B is a manufactured product, the what-if intermediate

component cost in this column is determined based on the what-if cost of the intermediate product which is calculated incolumn T. Note that the what-if component cost is calculated as the sum of all the what-if costs of components that are

linked to the intermediate product on the BOM sheet. If the component is a bought-in product, the what-if intermediate

component cost of the product will be nil.

WI I/M Prod Cost - the what-if intermediate product costs of components are calculated by multiplying the what-if

intermediate component cost of the component by the input quantity in column C and dividing the result by the yield in

column D.

What-If Cost - if the component is a bought-in product, the component what-if cost will be equal to the component bought-in

what-if cost. If the component is an intermediate product, the component cost will be equal to the intermediate what-if cost.

Note that the what-if cost of the manufactured product that has been selected in column A will equal the sum of all thecomponent what-if costs that are calculated for the particular product in this column.

Level1 Forecast - the stock quantities of all bought-in and intermediate products that are required in order to produce the

forecasted finished product quantities that have been entered on the Forecast sheet are calculated in this column. Note that

only the components that are directly included in the finished product bills of material will reflect quantities in this column.


Level1 Forecast quantities that have been calculated in the previous column will be included in this column. Note that only

the intermediate product quantities that are included in the previous column will have an effect on the calculations in this

column because bought-in items contain no components.Level2 Forecast - the stock quantities of all bought-in and intermediate products that are required in order to produce the



column because bought-in items contain no components.





Level4 Forecast - the stock quantities of all bought-in and intermediate products that are required in order to produce theLevel3 Forecast quantities that have been calculated in the previous column will be included in this column. Note that only


















Note: All the components that are added to the BOM sheet should form part of a continuous cell range. There should

therefore be no blank rows between entries otherwise all the components that are listed on this sheet may not be included in

the template calculations. The BOM sheet should be used to create and maintain the links between manufactured products

and their components - the Costing sheet should be used in order to review individual product costings.

Labour & Direct Overheads

For the purpose of compiling product costings, stock codes also need to be created for all labour, direct overheads and even

distribution costs that need to be included in the product costings. These stock codes should be seen as cost centre codes

instead of stock codes which are represented by physical stock on hand.

The appropriate labour pay rates or overhead allocation rates should be entered in the Purchase Price column on the

StockCode sheet and the appropriate production times should be entered in the Input Quantity column on the BOM sheet. A

100% yield should be entered for all labour and overhead costs.

Example: A beef burger is manufactured in a kitchen that consists of 3 staff members. The labour rate is $10.00 per hour

and a total of 400 beef burgers are produced during a shift of 8 hours. In order to add the labour component to the beef

burger product costing, we need to create a stock code for labour on the StockCode sheet (in our example data, all labour

related stock codes start with an "LB"), enter a UOM of hours for the stock code, enter the $10 per hour as the purchase price of the stock code, add the labour component code to the beef burger bill of material on the BOM sheet, calculate the

production time (3 staff members multiplied by 8 hours in a shift and divided by the 400 beef burgers that are produced),

enter the production time as the input quantity of the labour component on the BOM sheet and enter a yield of 100% on the

BOM sheet.

You can create multiple labour stock codes on the StockCode sheet if there are different labour rates for different staff

members. All the applicable labour stock codes then need to be added separately on the BOM sheet. Additional stock codes

do not need to be created if only the production time (input quantity) differs between products because different production

times can be accommodated by entering different input quantities for each product on the BOM sheet. It is only when thelabour pay rates differ that separate stock codes are required.

Example: Direct overheads or distribution costs can also be added to the product costings by creating a stock code for each

type of overhead. We suggest that you compile a monthly forecast of all the appropriate costs, determine the average

number of units that are produced on a monthly basis, calculate the overhead rate by dividing the forecasted monthly

amount by the number of units, create a stock code for the appropriate type of direct overhead cost on the StockCode sheet,

enter a UOM of "Units", enter the overhead rate as the purchase price, add the overhead stock code as a component on the

BOM sheet for all the applicable products and enter an input quantity of 1 and a yield of 100% on the BOM sheet.

Cost Review

The Costing sheet can be used to review individual product costings. All the calculations on this sheet are automated and

the only user input that is required is selecting the appropriate stock code of the manufactured stock item from the list box in

cell A4.

The Costing sheet is compiled from the data that is entered on the StockCode and BOM sheets. The component product

costs and what-if costs are calculated in column O and T on the BOM sheet based on the purchase prices and what-if pricesthat are entered in column D and E on the StockCode sheet. The components that are included in the product costing are

based on the components that have been linked to the manufactured product on the BOM sheet and the component input







The Costing sheet also includes calculations of the total product cost of the manufactured product (cell H4), the total what-if

cost of the manufactured product (cell J4), the cost variance between the total product cost and the total what-if cost (cell

K4), the product cost of each component (column H), the what-if cost of each component (column J), the component cost

percentage in relation to the total product cost of the manufactured product (column I) and the difference between the

product costs and what-if costs of each component (column K). Refer to the What-If Costs section of these instructions for

more guidance on the what-if cost calculations.







Note: The Costing sheet can accommodate a maximum number of 30 components per manufactured product. If you

therefore link more than 30 components to a manufactured product on the BOM sheet, all the components will not be

included on the product costing and the costing will therefore not be accurate.

Note: The total product cost in cell H4 on the Costing sheet is the same as the product cost of the manufactured stock item

that is included in column H on the StockCode sheet. The Costing sheet can therefore be used to view a detailed

breakdown of all the cost components that are included in the product cost of any manufactured stock item.

Note: Bought-in stock items are purchased from suppliers and should therefore not contain any components. As we've

mentioned before, all stock items that are not linked to components on the BOM sheet are classified as bought-in stock

items. If you select a bought-in stock item from the list box in cell A4, no stock components or costs are therefore listed onthe Costing sheet and the stock type in cell C4 is highlighted in orange. If the stock code that you selected is supposed to be

a manufactured stock item, the fact that it is classified as a bought-in stock item means that no components have been

linked to the stock item on the BOM sheet.

Note: If you duplicate a stock component that is already linked to a particular manufactured product on the BOM sheet, the

stock component will be also be duplicated on the product costing and result in an inaccurate product cost calculation. We

have therefore implemented conditional formatting on the Costing sheet in order to highlight all duplicated components in

orange in column I. If an orange cell background is displayed in any cell in column I, the appropriate component needs to bedeleted from the BOM sheet in order to correct the duplication. We recommend sorting the BOM sheet by the product stock

code in column A and the component stock code in column B in order to make it easier to find the duplicate entries.

What-If Costs

The what-if cost features have been added to the template to enable users to measure the effect that component price

fluctuations have on the product costings of manufactured stock items. The component purchase prices that need to be

analysed should be entered in column E on the StockCode sheet. All other what-if cost calculations are updated

automatically.

Note: What-if costs should only be entered for bought-in stock items (items that are purchased from suppliers). If you enter a

what-if cost for a manufactured stock item, the cost will have no effect on the template calculations.

The what-if costs are calculated and included in the what-if costings based on the what-if purchase price that is specified in

column E on the StockCode sheet and the component input quantities and yields that are specified on the BOM sheet (the

same input quantit ies and yields that are used in the product costings). The what-if component costs are calculated in

column T on the BOM sheet, included in column J on the Costing sheet and the total what-if cost of the manufactured

product that is selected from the list box in cell A4 on the Costing sheet is calculated in cell J4. The component what-if costsand the total what-if cost of the manufactured stock item are also compared to the appropriate product costs on the Costing

sheet.

As we mentioned before, the what-if cost features can be used to analyse the effect that component price fluctuations have

on product costings. We recommend that you start this cost comparison exercise by copying the purchase prices of all

bought-in stock items from column D on the StockCode sheet to column E on the StockCode sheet. The prices in column E

(the what-if cost column) can then be amended to the what-if purchase prices that you want to analyse. The same procedure

should be followed regardless of whether you want to analyse the effect of a price fluctuation in a single stock component or

all stock components.

All the what if cost calculations in the template are automatically updated and you can view a comparison of all













Note: If you want to analyse the effect that changes in component input quantities and yields have on the product costings,

you will have to save this template under a different file name, edit the component input quantities and yields on the BOM

sheet of the new workbook and then compare the product costs of the manufactured stock items on the StockCode sheets

of both workbooks. We also recommend adding a calculation on one of the StockCode sheets that looks up the values in

the other workbook based on the stock codes in column A - this will enable you to compare the product costings in the two

workbooks on the same sheet.

Quantity Forecast

The Quantity Forecast features that have been added to the template enable users to enter forecast quantities for all the

appropriate manufactured stock items on the Forecast sheet in order to calculate the stock component quantities that are

required in order to produce the specified quantities of manufactured products. These calculations are extremely useful for

requirements planning or stock usage measurement purposes.

Note: Requirements planning refers to the process of calculating the quantities of manufactured stock items that need to be

produced (usually based on sales forecasts) and then calculating the component quantities that will be required in order to

produce the manufactured products. Orders are then placed with the component stock suppliers based on the quantity

requirements that have been calculated.

Note: Component stock usage can be measured in much the same way. Instead of entering the quantities of manufactured

stock items that need to be produced, users enter the quantities of manufactured stock items that have actually been

produced during the period under review. The component quantities that should have been used in order to produce the

specified manufactured stock item quantities are then automatically calculated (based on the product costings) and these

quantities can then be compared to the actual component stock quantities that have been used in order to measure

production efficiency and the accuracy of the input quantities and yields that have been included in the product costings.

Quantity forecasts can be compiled by simply specifying the stock codes of the appropriate manufactured stock items in

column A on the Forecast sheet, copying the formulas in columns B (stock description), column C (stock unit of measure)and column D (input error codes) for all the rows that contain a stock code in column A and then entering the quantities of

each manufactured stock item on which the forecast should be based in column E.

Note: All the finished goods stock codes that are added to the Forecast sheet should form part of a continuous cell range.

There should therefore be no blank rows between stock codes otherwise all the components that are listed on this sheet

may not be included in the template calculations.

Note: We also recommend entering the forecast date in cell G2 before printing the sheet in order to keep a record of the

manufactured product quantities that have been used in all quantity forecasts because once you replace the quantities onthis sheet with new forecast quantities, there will be no record of the forecast quantities on which the previous forecast has

been based.

Note: Before using the Forecast feature, you should ensure that all your product costings are accurate. If you base the

forecast on inaccurate product costings it may result in the incorrect component quantities being ordered from suppliers or

an inaccurate analysis of production inefficiencies.

The quantity forecast is calculated by applying the finished goods stock item quantities that are specified on the Forecast

sheet to the appropriate components that are entered on the BOM sheet for the particular manufactured stock items. Thiscalculation is based on the appropriate component input quantity, yield and unit of measure and is included in columns U to

Z on the BOM sheet







Note: The Forecast calculations that have been included in this template therefore incorporate 7 levels of bills of material. If

you need to include more than 7 levels of bills of material, contact our Support function in order to request a customized version of this template and specify the number of levels that you need to include in your product costings. Note that the

product costing calculations incorporate an unlimited number of bill of material levels - the limit of 7 levels only applies to the

Forecast calculations.







The forecast quantities that are calculated on the BOM sheet are not really that important (only included on the BOM sheet

for calculation purposes). The quantities that are included in column J on the StockCode sheet are a lot more important

because they represent the total component quantities that are required in order to produce the finished goods stock

quantities that are entered on the Forecast sheet.

Note: The forecast quantities on the Stock Code sheet include both the bought-in and intermediate quantity forecasts even

though the intermediate products are not ordered from suppliers but manufactured in house. We have included the

quantities for both of these component types because it may be useful to be able to determine the quantities of intermediate

components that need to be produced in order to manufacture the specified quantities of finished good products (as per the

Forecast sheet).

Note: We highly recommend using the Quantity Forecast features to measure actual stock component usage against the

calculated component quantities because this process will highlight discrepancies between the component quantities that

are included in product costings and the component quantities that are actually being used during the production of

manufactured products. Product costings should also be reviewed regularly based on the results of the usage measurement

exercise. Remember that the Quantity Forecast calculations in this template can only be as accurate as the component

input quantities and yields that are included in the product costings.

Margins

The Margins sheet enables users to calculate the gross profit margins of all manufactured stock items based on the product

costings and what-if costings. The only user input that is required is selecting, entering or copying the appropriate stock code

of the finished goods stock item into column A and entering the appropriate selling price in column E. All the other columns

(with a light blue column heading) contain formulas that should be copied for all the rows that contain a stock code in column

A.

Note: The selling prices that are entered in column E should be exclusive of sales tax if the business is registered for sales

tax purposes.

The product cost in column F and the what-if cost in column I are the same as the product cost and what-if cost for the

particular manufactured stock item as calculated on the StockCode sheet. The gross profit amounts in column G and J are

calculated by deducting the product cost or what-if cost from the appropriate selling price in column E. The gross profit

percentages in columns H and K are calculated by dividing the gross profit amounts in column G and J by the appropriate

selling price in column E.

The what-if selling prices in column L are calculated by applying the gross profit percentages in column H to the what-if costs

in column I and therefore calculate what the selling price should be in order to sustain the same level of profitability if theprice fluctuations that are included in the what-if costs come into effect. The selling price increases in column M indicate the

percentage variance between the what-if selling prices in column L and the selling prices that are entered in column E.

Error Codes

The following error codes may result from inaccurate user input on the StockCode, BOM, Forecast and Margins sheets and

will be displayed in the Error Code columns. The heading of the affected input column will also be highlighted in orange:

■ E1 - this error code means that a duplicated stock code has been entered in the appropriate row. The error can be

t d b i l d l ti f th d li t d t i







■ E3 - this error code means that the what-if price input in column E on the Stock Code sheet is incorrect. A what-if price

should be entered for all bought-in stock items but is not required for manufactured products. When adding new manufactured stock items to the StockCode sheet, this error code will be displayed until the appropriate components have

been added to the BOM sheet. The error can be therefore be corrected by adding a what-if price for a bought-in stock item,

adding components to a manufactured stock item or deleting a what-if price that has been specified for a manufactured

product.







■ E4 - this error code means that the product stock code that has been specified is invalid. Stock codes must be created on

the StockCode sheet before being used on any of the other sheets and the error can therefore be corrected by simply creating the appropriate stock code on the StockCode sheet. If a stock code has been deleted, this error code will be

displayed in all the rows on the other sheets that still refer to the stock code. These entries must be deleted or a valid stock

code needs to be selected in column A.■ E5 - this error code means that the component stock code that has been specified is invalid. Stock codes must be created

on the StockCode sheet before being used on any of the other sheets and the error can therefore be corrected by simply

creating the appropriate stock code on the StockCode sheet. If a stock code has been deleted, this error code will be

displayed in all the rows on the BOM sheet that still refer to the stock code. These entries must be deleted or a valid stock

code needs to be selected in column B.

■ E6 - this error code means that a component has been duplicated in the same product costing. Components should only

be included once in any particular product costing and duplications of component codes may result in inaccurate product

costings. This error can be corrected by sorting the data on the BOM sheet in an ascending order based on the product

code in column A and then by the component code in column B before deleting any duplicated entries that may exist.

Note: Input errors may result in inaccurate template calculations and it is therefore imperative that all errors are resolved

before reviewing the product costings, quantity forecasts or profit margins.

Circular Reference Warning

The complex nature of the calculations that have been included in this template requires multiple calculation iterations in

order to complete the calculation cycle. This is only possible in Excel if the iterative calculation setting (which is part of the

default Excel options) has been enabled. We have enabled this setting for the template but unfortunately the setting may be

automatically overridden if a workbook which has this setting deactivated is active in the Excel application when the template

is opened.

If the iterative calculation setting is overridden when opening the template, the user will receive a circular references warning

and some of the product costing calculations will not be updatable. This is nothing more than an inconvenience which can beresolved by completing any of the following steps:

■ Activate the calculation iteration settings by selecting the main Tools menu, selecting the Options feature from the menu,

opening the Calculations tab and selecting the checkbox next to the "Iterations" label. You can retain the default settings for

the maximum iterations and maximum change settings. You may notice a "Calculate" message in the status bar at the

bottom of the Excel application window but this message will have no effect on the way in which the calculations are

updated in all the other open workbooks.■ Close all open workbooks before opening the Product Costing template. This will ensure that the iteration setting is

activated automatically and you therefore don't need to complete the manual process as per the previous point.

■ If the above steps prove to be too cumbersome for your liking, e-mail our Support function and request a macro enabled version of the template to be sent to you. The macro enabled version only includes a single macro which automates the

activation and deactivation of the iteration calculation settings.■ WARNING: When the iteration setting is activated, Excel will not identify and warn users of any circular references that

may be present in the affected workbooks. If circular references are present in a workbook, the absence of these warnings

may lead to inaccurate calculations in the affected workbook. We therefore recommend that you close all other open

workbooks before opening the Product Costing template; that you do not save any other open workbooks after the iteration

setting has been enabled (or that you resave the workbooks after the iteration setting has been disabled) and that you

disable the iteration setting after using the Product Costing template.■

NOTE: The iteration calculation settings only affect the Excel 2003 version of the Product Costing template. This setting does not need to be activated in the Excel 2007 / 2010 version of the template which makes the latter version a lot less

cumbersome to use







The functionality that has been included in this template uses data validation and named cell ranges in order to validate all

user input and to perform the calculations that form part of this template. Most of the formulas that are used in this templateare based on named cell ranges that include the first 1,000 rows on the appropriate sheets. When the number of entries that

are added to any of these sheets reaches this limit, you will therefore have to extend the default number of rows in order to

include all the entries in the template calculations.







The named cell ranges can be extended by accessing the main Insert menu, selecting Name, and selecting Define in order

to open the Define Name dialog box. The calculations that include the entries on the StockCode, BOM, Forecast andMargins sheets are all based on the "Records" named range. This named cell range includes a default value of 1,000 and

you can therefore extend the number of entries that are included in the template calculations by simply entering a new value

for this named range and clicking the OK button.

The data validation features that are used to validate user input have been implemented in the first 1,000 rows on the

appropriate sheets. Before you reach this limit, you can simply copy one of the blank rows before row 1,000 and paste the

cells in this row into the required number of rows. This action will copy all the data validation features into the target cell

range.

Help & Customization

If you experience any difficulty while using this template and you are not able to find the appropriate guidance in these

instructions, please e-mail us at [email protected] for assistance. This template has been designed with flexibility in

mind to ensure that it can be used in most business environments. If however you need an Excel based template that is

customized specifically for your business requirements, please e-mail our Support function and provide a brief explanation of

your requirements.





Stock Codes

Set-up

© www.excel-skills.com 626,834.44 717,075.88

Stock Code Description UOMPurchase

PriceWhat-if Price

Error

CodeProduct Type Product Cost

What-If

Cost

Quantity

ForecastValue Forecast

What-if Value

Forecast

1212GHG Garden Shed Units Manufactured 4,130.88 4,725.37 - - - 1212PHP Painted Garden Shed Units Manufactured 4,956.39 5,681.10 - - -

1212THT Tools Shed Units Manufactured 3,621.31 4,138.33 - - -

RM10 Steel Plates M2 140.00 160.00 Bought-In 140.00 160.00 1,722.22 241,111.11 275,555.56

RM25 Door Handle Units 150.00 170.00 Bought-In 150.00 170.00 155.00 23,250.00 26,350.00

RM30 Wood M2 120.00 135.00 Bought-In 120.00 135.00 2,177.78 261,333.33 294,000.00

RM50 1 Inch Screws Bag 30.00 36.00 Bought-In 30.00 36.00 17.22 516.67 620.00

RM55 2 Inch Screws Bag 50.00 62.00 Bought-In 50.00 62.00 536.93 26,846.41 33,289.54

RM60 Glass M2 80.00 90.00 Bought-In 80.00 90.00 188.24 15,058.82 16,941.18

RM70 Filler Bag 60.00 70.00 Bought-In 60.00 70.00 88.89 5,333.33 6,222.22

RM75 Swivel Units 3.50 4.00 Bought-In 3.50 4.00 310.00 1,085.00 1,240.00

RM80 Paint - White Drum 220.00 250.00 Bought-In 220.00 250.00 63.16 13,894.74 15,789.47

RM85 Paint - Green Drum 240.00 280.00 Bought-In 240.00 280.00 35.29 8,470.59 9,882.35

SD18 Door Units Manufactured 313.67 357.00 155.00 - -

SD20 Window Units Manufactured 29.53 33.97 640.00 - -

SD25 Roof Units Manufactured 1,766.67 2,024.44 155.00 - -

SD30 Window Frame Units Manufactured 321.45 368.52 100.00 - -

SD35 Glazed Window Units Manufactured 39.53 46.47 240.00 - -

SD40 Glazed Window Frame Units Manufactured 361.45 418.52 60.00 - -

LB10 Labour - Grade 1 Hours 20.00 25.00 Bought-In 20.00 25.00 1,264.22 25,284.44 31,605.56

LB15 Labour - Grade 2 Hours 30.00 36.00 Bought-In 30.00 36.00 155.00 4,650.00 5,580.00

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Documents

Costing Sample