By-Products from Work Orders
Overview
This feature allows manufacturing users to produce multiple products, including by-products, when completing a work order. It improves inventory tracking by recording all produced items in a single work order. In addition, by-product costs can be calculated using either the fixed cost method or the allocation method.
Example
The instructions below outline these items as an example:
Finished Good - Sold to Retail Stores
Peeled Apple Snack Box
Formula/BOM
1 Apple
1 Box
1 Plastic Wrap
By-Product - Sold to an Apple Cider Vinegar Company
1/4 Ounce Apple Peels
1 Apple Core
By-Product Configuration
Create Items for both the Finished Good and the By-Product(s)
See here for a reminder of how Finished Goods are configured with a Formula (BOM): Creating Item Formulas (BOM)
Define By-Product(s) for a Finished Good
Open the Item for the Finished Good
Navigate to the By-Products (Parent Item) Related List
Click the New Button
In the Item field, enter the By-product
In the Qty Per field, enter how much of the By-product is created when you create one of the Finished Goods.
In the Unit of Measure field, enter the corresponding UOM for that quantity
Click Save
Or Save & New if you have another By-product to add
Also, By-product(s) must be lot-tracked
Click the pencil icon next to Lot Tracked
The edit window will be displayed
Check Lot Tracked
Click Save
Note that the by-Product (s) are added to the related list for the finished goods.
(Optional) Assign Costs to By-Products
To Assign a Fixed Cost to a by-product:
Open the Item Details Page for a the finished good associated with the by-product.
Navigate to the By-Products (Parent Item) Related List
Click on the By-Product record
The By-Product details page will be displayed
Click the pencil icon next to Fixed Unit Cost
Enter the cost
Click Save
Note: If you do not see the Fixed Unit Cost field on this page, reach out to your company’s salesforce administrator to add it.
Create Work order for Finished Good and By-product(s)
Creating a work order for a finished good will include any by-products and quantities associated with that finished good.
See Creating a Work Order for instructions how to create work orders.
Process Work Order with By-Product(s)
Process the Work Order for the Finished Good
See instructions here: Process Work Orders
Navigate to the Output By-Products Related List to review the By-Products.
Lot No. for By-Product will automatically be created.
Lot No. Format = YYYYMMDD
You can edit the lot if needed
You can edit the lot if needed
Navigate to the Output By-Products Related List
Click on the “OBP” number for the lot you need to change
On the Output By-Product detail page, edit Item Lot
Select a lot or create a new lot
See here for Item Lot specifics
Click Save
(Optional) Allocate Total Costs to Both the Output Item and the By-Product
Before posting the item journal, click Edit.
The Item Journal Details Page is displayed
Click the checkbox next to the Auto Allocate By-Product Cost
Click Save.
Finish Production
Post the Item Journal
The Finished Good and By-Product(s) are now in the Output bin.
Ledger Entries for By-Products, together with the Output Item, have been created
The Is By-Product field will be checked for By-Product output.
If the Auto Allocate By-Product Cost field on the Production Journal is not checked, the Fixed By-Product Cost field will be checked on the Item Ledger Entries.
If you do not see these columns in the list, please reach out to your salesforce administrator to add them.
Finish Work Order
When finishing the Work Order, GoldFinch will calculate the By-Product Finished Cost according to the following logic:
Default Option: Fixed By-Product Cost
GoldFinch will use the Fixed Unit Cost entered on the Output By-Product to cost By-Product items.
The remaining Finished Cost will be allocated to the Output Item using this formula:
Cost of Output Item = Finished Cost - By-Product Finished Cost
See example below:
Work Order
Finished Cost: 201.60
By-Products:
Apple Core
Qty = 144
Cost = 2.88
Apple Peels
Qty = 36
Cost = 0.36
Total By-Product Cost = 3.24
Output Item: Peeled Apple Snack Box
Qty = 144
Finished Good Cost = 201.60 - 3.24 = 198.36
Alternate Option: Allocate Total Costs to Both the Output Item and the By-Product
If the Auto Allocate By-Product Cost is checked on the Production Journal, the Fixed By-Product Cost field will not be checked on the Item Ledger Entries
GoldFinch will allocate Finished Cost based on the total base quantities of both the Output Item and the By-Product items using this formula:
Cost of By-Product1 = Finished Cost * (Base Quantity of By-Product1 / (Base Quantity of Output Item + Base Quantity of By-Product1 + Base Quantity of By-Product2)
See example below:
Work Order
Finished Cost: 201.60
By-products:
Apple Core
Qty = 144
Cost = 201.60 * (36/(144+36+144)) = 22.40
Apple Peels
Qty = 36 Ounces
Cost = 201.60 * (144/(144+36+144)) = 89.60
Total By-product Cost = 112.00
Output Item: Peeled Apple Snack Box
Qty = 144
Finished Good Cost = 201.60 - 112.00= 89.60
Cost Updates
GoldFinch will update By-Product costs at nighttime using the above logic if the cost of any component is updated.