Costing interfaces
Costing interfaces show what an item cost to make (material, labour, machine time, overhead) and how that compares with the expected cost.
The figures depend on postings made on the shop floor, so costing design starts with the capture screens.
Key facts
- Three figures matter: standard cost, actual cost and the variance between them.
- Variance is split by price, usage and efficiency.
- A finished good’s cost adds up components and operations across several levels.
- Labour recorded in bulk at shift end turns operation-level cost into an allocation.
What it covers
| Figure | Meaning |
|---|---|
| Standard | Expected cost, set in advance |
| Actual | Cost according to postings |
| Variance | The difference, split by price, usage and efficiency |
Costing screens cover cost roll-ups for an item, cost per order or job, variance reports and the drill-down from a total to the posting behind it.
Who uses it
| Role | Question |
|---|---|
| Accountant or controller | Which postings make up this figure, and is it final? |
| Owner or general manager | Which products and orders make money? |
| Production manager | Where does actual usage or time differ from the standard? |
| Sales | What does it cost to make, for quoting? |
What makes it hard to design
Drill-down. Accountants need to move from the total to a line and then to the posting behind it.
Status of figures. Each figure should show whether it is provisional or closed.
Capture on the floor. Labour, machine time, scrap and material are posted against the work order and job structure. Cost by operation requires operators to open and close operations as they work. If that step is slow, postings arrive in bulk at shift end.
Material bought in one unit and consumed in another is costed through the conversion on the item. A wrong conversion appears as a variance that has nothing to do with production.
Trade-offs
- Actual costing at operation level shows the real margin of each order, provided the floor records every operation. Standard costing with periodic variance is cheaper to run, and losses appear only in aggregate.
Common mistakes
- Labour recorded in bulk at the end of a shift. Operation-level cost becomes an allocation, and variance reports measure the allocation rule.
- Provisional figures shown as final
- A total with no path to the postings behind it
- Costing screens designed before the capture screens that feed them
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