BellHawk Activity Based Costing Support

A major problem for many organizations is accurately determining the cost of work-in-process. This is required for several reasons: Accurately determining the cost of each job or production run and comparing the actual cost with the estimated or expected cost. Capturing cost data to feed to an accounting or ERP system. Capturing work-in-process cost data for Sarbanes-Oxley compliance. Accurately billing customers on cost-plus processing contracts.

BellHawk is able to capture:

1.      Labor hours by employee on each job step or operation.

2.      Materials consumed in each operation, including scrap and wastage.

3.      Machine time for setup, run, down and cleanup.

These data elements can be captured based upon Bills of Material (BOMs) and Routes for manufacturing jobs imported from an ERP or manufacturing control system.

BellHawk can also capture this data based on Routes directly entered within BellHawk. In this case, BellHawk will typically also compute the cost of manufacturing products or performing jobs based upon standard hourly rates for labor and machines and actual cost for materials.

When the estimated labor and machine hours and the BOM are stored within BellHawk for each job step, or imported from an ERP system, then BellHawk can produce reports comparing estimated versus actual costs for each job step and for the overall job.

A major feature of BellHawk is its ability to cost work–in–process (WIP). This enables accurate reporting of WIP inventory to be performed. This eliminates the "black–hole" phenomenon, whereby materials are removed from physical inventory at the beginning of the production line and then "re–appear" as finished goods as the end of the line, with no accurate accounting for all the materials in a semi–finished state.

BellHawk is especially suited to those activity based costing applications where:

1.    A pencil and paper system is currently being used, with a lot of time being wasted keying in the data into Excel spreadsheets or into a legacy ERP, financial or manufacturing control system.

2.    Many mistakes are being made in data collection due to a lack of real–time verification of correct data inputs.

3.   There is lack of supervisory oversight and sign–off on the data being captured.

4.   Support for appropriate barcode, RFID and wireless mobile data collection devices is not available for existing legacy financial and ERP or manufacturing control systems.

5.    It is desired to use custom activity based costing calculations that are appropriate to the business. This can include algorithms that incrementally estimate the cost of containers of products manufactured during runs that may last weeks or months.

6.   Semi–custom orders are produced for customers where all the operations and the BOMs may not be known accurately in advance.

7.   Many different products are being made, such as in a contract manufacturing situation.

8.   Near real–time reporting is required to spot cost discrepancies early.

For assistance with a specific activity based costing problem, please click on the link below.