Introduction
Within food manufacturing companies, it is common practice that during the production of an item, other products are also manufactured. In some cases, these other outputs are expected upfront as a co-product, but in some cases, it is more registered as an unexpected by-product. It is essential that these companies can register co and by-products and value these against the correct inventory rate. The production quantity depends on the machine and the amount of the By-Product is dependent on the Base Unit of Measure of the main item.
Key Usage Scenario’s
- Multi-Product Manufacturing.
- Waste and Sustainability Tracking.
- Managing Production Quantities of Co/By-Products.
- Standard Cost Allocation for Compliance.
- Entering negative Production Order Material lines is not supported in Co/By-product management
- Co/By products are not part of production planning.
- One Co-Product can only be attached to one main item. This means that it’s not possible to have a Co-Product attached to an entire family.
Key Concepts and Definitions
- Co-Product: A product typically manufactured alongside or sequentially with another product due to similarities in the product or production process.
- By-Product: A material of value produced as a residual of or incidental to the production process. The ratio of by-product to primary product is usually predictable. By-products may be recycled, sold as is, or used for other purposes.
- Main Item Where Used: Shows all Main Products where a specific item is used as a Co/By-Product, including quantity per relationships.
- Capacity Cost Allocation: Defines how capacity (machine) costs are assigned when multiple items (Main and Co/By-Products) are produced in the same order.
- Cost App. Co/By-Products: Specifies whether capacity costs from Work Centers with Unit Cost Calculation = Units should also be applied to Co/By-Products.
- Co/By-Product Distribution Rules: Co/By-Product cost distribution depends on the Work Center’s Cost Calculation Unit (Unit vs. Time) and the Capacity Cost Allocation setting.
When Cost Calculation Unit = Unit
Work Center calculates cost per unit produced.
| Capacity Cost Allocation | Cost App. Co/By-Products | Behavior |
|---|---|---|
| Quantity Proportional | All | Each Co/By-Product gets its own share of unit-based cost. |
| Quantity Proportional | None | Co/By-Products get zero capacity cost; the system sets Unit Cost, Unit Amount, and Unit Cost (ACY) to zero in output journals. |
| None | (any) | Co/By-Products never receive unit-based capacity cost. All unit-based capacity cost goes to the Main Product. |
When Cost Calculation Unit = Time
Work Center calculates cost based on Run/Setup time.
During Journal Posting (Output/Production Journal): Co/By-Products cannot register Run Time or Setup Time; fields are non-editable. Therefore, Co/By-Products do not receive any time-based cost when posting output.
| Capacity Cost Allocation | Behavior |
|---|---|
| Quantity Proportional | Time-based cost is distributed only when finishing the production order, not during posting. The system takes the Main Product’s time and proportionally allocates part of it to each Co/By-Product based on their output quantity. |
| None | No time is distributed to Co/By-Products. All time-based capacity cost stays with the Main Product. |
Items set with Standard Costing
For items with the Costing Method set to Standard, standard Business Central costing is used.
- When the costing method for an item is set to Standard, Business Central uses the predetermined costs established in the item card.
- Capacity costs are then calculated based on this standard rate, without any additional adjustments or proportional allocations.
You can get more details here.