Beer Costs – Identifying True Cost of Goods Sold

Does your brewery have a handle on your Cost of Goods Sold?

Identifying Your Cost of Goods SoldIn most breweries, accountants have limited access to actual production data and the data they have is in various sources such as Excel, calendars, Word and paper.  Getting this data centralized in a meaningful way is very time consuming and error-prone.  Because of this, most breweries do not go much further than creating financial statements with much of this data.

A typical month-end process involves taking a physical inventory, factoring in the purchases for the month and subtracting last month’s value of inventory.  If they want a cost per unit they factor in the production for that time period.  While this process gets you to a cost of production value it does little to identify how much it costs the brewery to brew a single style of beer.

Breweries with a centralized brewery management system like VicinityBrew are able to analyze ingredient usage as well as applied labor overhead and labor.  They are able to cost out each barrel of wort on a brew by brew basis.  This process continues through fermentation and into packaging.

The result provides an easy view of the cost of grain, water, yeast, hops, packaging, labor and applied overhead to every case or keg of beer.  When there are significant variances managers can review the operations and identify what varied from the plan.  This can be done in real-time and before the problem gets out of control.

This information certainly helps the accountant at the brewery but it also assists sales. Knowing a true Cost of Goods Sold helps understand margins and can affect a selling price for a specific style of beer.

Now you can be the brewery that knows the cost of production one time per month (1 week into the next month) or you can see the cost on a brew by brew basis.

If you would like to learn more about how VicinityBrew can help identify your cost of goods sold, please do not hesitate to contact our team!

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