Millworx is capable of handling most Job Costing necessary for hardwood milled products and items that don't require job costing or items quoted by using a list price.
The standard quoting module is based upon a Job Costing concepts. Job costing is a fundamental part of marketing accounting, also referred to as managerial accounting, whereby the Selling Price is determine based upon the material and labor needed to produce a product, plus a profit margin. Therefore, you don't know the Selling Price until all of the cost are summed and a margin is added.
Also, Job Costing differs from Process costing in that the flow of costs is traced by job instead of by process. For instance, think of an assembly line making a garment. Job order costing would track how much material is placed in each garment. Process costing tracks the amount of fabric used, the cutting and sewing time, and other aspects of the process of making garments. Job costing is typically used for special orders or when the product made is unique, like custom hardwood milling or auto-body shop repairs and construction. Process costing is used when the products are more homogeneous and static in nature like base-shoe, often times based upon a fixed price.
Markup vs. Margin Target Pricing
In the following example, a 20% markup of cost is compared with a 20% margin between the Sell Price (SP) - Cost (C).
Using a Markup from Cost
Using a Target Gross Profit (GP) Target Margin
Cost = 100.00
Markup = 20% of cost or cost * 1.2
Sell Price = $120.00
Profit Yield = $20.00
Cost = 100.00
GP Target % = 20% of SP (Cost/(1 - GP%)
Sell Price = $125.00
Profit Yield = $25.00
Millworx uses many formulas to calculate the lumber required for milled products based upon the board-feet, square feet, lineal, or piece item quotes.
The primary formula for Job Costing in Millworx is:
Sell price = Cost (material, labor, delivery, etc.) + a profit margin + cost of sales (cos)
IMPORTANT NOTE: You can only add profit to a quote by increasing the Profit Margin Percentage Target or in the examples below, by increasing the Sell Price. Any amount added to one or more of the cost fields will increase the cost and the profit according to the target profit percentage specified. If you add your sales bonus calculation, also referred to as Cost of Sales in Millworx, then the profit is also computed on the COS.
Millworx is capable of handling most Job Costing necessary for hardwood milled products and items that don't require job costing or quoted by using a list price may be quoted by one of the options below:
Optional Pricing Methods in Millworx:
1.Establish the Sell Price by Entering the Sell Price Each. The Sell Price is derived by multiplying the Entered Sell Price Each * the product quantity (piece, lineal feet, board feet or square feet.
2. Establish the Sell Price by selecting an item from an item list price imported from Excel, QuickBooks or WoodPro.