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Costing

Accurate winery cost accounting: Hard work made easy.

Accurate costing isn't just about better numbers, it is about better wine. Knowing the true costs of production helps you channel resources into efforts that really improve the quality of the finished product.

vinBalance takes out the hard work installs accuracy in cost tracking. You just enter the basics of daily work and the use of supplies; vinBalance does the heavy lifting of knowing the true costs of every drop in your cellar.

vinBalance saves the winemaker time by gathering all pertinent records in one convenient program.


Boring But Necessary:
Why is winery cost accounting so hard?

In its simplest form, cost accounting records all of the costs of production (labor, materials, equipment, etc.) and divides the cost over all of the units produced during a time period. This model works well for businesses producing a single product with a uniform manufacturing process.

A whole range of challenges must be met for successful cost accounting in the winery environment:

  • Non-uniform, indeterminate products in a variable process. Uniformity is a basic assumption of simple cost accounting, i.e. making the same product the same way over time. The winery is a decidely different enviroment. The nature of the raw materials, manufacturing process and even end product can vary significantly from year to year. Even within a year, a winemaker cannot be certain of the exact processes and costs that will be applied from crush to bottle.
  • Extended manufacturing time. The year long or multi-year process of winemaking adds significant warehousing and capital costs that must be incorporated in the final product cost.
  • Delayed application of costs. Sometimes costs are incurred in the winemaking process that cannot immediately be assigned to a product. The costs associated with ozoning a barrel must be held and tracked until a volume of wine entering the barrel takes on the costs as a part of that product. Lab analysis performed on fruit that is still in the field is another cost that must be tracked until the fruit is received and processed.
  • Blending. Lots of wine moving through the process acquire complex cost histories as labor and materials are used over the months long process. At blending time, the cost histories must be logically combined in order to arrive at the true cost of the blended product.
  • Capital intensive. Winemaking is capital intensive. It is easy to forget the cost of capital as a significant factor in the two to five year process from field to table. Bankers and investors are not so forgetful. The cost of capital must be tracked as a part of the product cost throughout the manufacturing process.
  • Volume losses. Evaporation and leakage take a constant toll on in-process volumes. Costs must be accurately tracked as they are effectively concentrated in ever smaller volumes.

All of these challenges converge to make accurate costing a near perfect storm of imperfect estimates. No wonder most winemakers have only a one-a-year calculation of production costs. Even that once-a-year number is a cross variety/cross vintage approximation.

Years of careful design have made vinBalance a tool fit for these challenges. Your staff does not need to know cost accounting, they just do their everyday jobs while vinBalance gathers and reports essential cost information that lets you make better decisions.

 

 

Copyright 2014, Ingio/VinBalance LLC