Recipe cost troubleshooting
Learn more about how to solve common costing issues with your recipes and manufactures.
- Why is my recipe cost different to my manufacture cost?
- My recipe cost is correct, however my manufacture cost is zero
- My recipe cost is significantly more than my manufacture cost
- My recipe cost is significantly less than my manufacture cost
Why is my recipe cost different to my manufacture cost?
Your recipe material cost shows you the total cost to produce your product today, given your current unit costs. Your manufacture material cost however is calculated from your material unit costs on the date of manufacture from your complete inventory history.
As your material costs can go up and down over time, your recipe and your manufacture costs are often slightly different.
If you find that your manufacture material cost is significantly different from your recipe material cost, this can indicate a problem that needs to be investigated.
We'll cover some common scenarios below.
My recipe cost is correct, however my manufacture cost is zero
This usually indicates that your materials were out of stock on the manufacture date. Follow the troubleshooting guide here to resolve under the heading "Manufacture with zero cost": Why is my manufacture costing incorrectly?
My recipe cost is significantly more than my manufacture cost
This can result from a cost dilution of your material stock somewhere in your adjustment history. This may have been caused by:
a) bringing forward zero-costed material stock as part of your starting adjustments, or
c) an incorrectly entered purchase between the manufacture date and current day.
For a) and b), if this is correctly entered then you will expect to see lower than expected manufacture material costs until the stock is fully consumed. If you have incorrectly entered a material stock increase as a manual adjustment, you'll want to see if you can replace this with a purchase instead.
Otherwise, you'll want to review your adjustment history for each material in the manufacture to pinpoint the cause of the costing difference and rectify it.
My recipe cost is significantly less than the manufacture cost
This situation can be caused by:
a) an incorrectly entered material expense between the manufacture date and the current day, or
b) an addition of unaccounted-for uncosted material stock using manual adjustments between manufacture date and current day