easybaan® Margin Control

Every company has cost units. Cost units can be products or product lines, projects or sales orders. Cost units are defined to assign the cost of manufacturing resources and other costs to the products through activity-based costing.

Margin control gives you an overview the profit or loss per product line.

This part of controlling is covered by easyPMC, a tool that reports the profit margin of products. Usually companies produce more than one product. While manufacturing, many resources are shared in the production process for several products or product lines. easyPMC reports the turnover of a product or product line, the consumed materials and labor, including production and purchase results.

Besides these direct costs, easyPMC also reports costs that are linked with a product but not directly linked to the production, like payment differences, allowances, and import taxes. If currency differences occur or reimbursements from insurance have been paid, this also can be assigned to a product line in the easyPMC.

It results in a profit and loss statement broken down to your profit lines or cost units and reported step-by-step, beginning at the gross profit, the turnover of the products. In 5 stages the costs are discounted from the gross profit, beginning with costs that are closely linked to the production of the product like materials and ending with costs that are not related to production, like overhead.

 

 

Stage 1  reports the profit margin, remaining from turnover, discounted by material costs

Stage 2 reports the profit margin, remaining from Stage 1, discounted by direct labor costs

Stage 3 reports the profit margin, remaining from Stage 2, discounted by indirect material costs, like import taxes, payment differences, allowances, and costs for material packages.

Stage 4 reports the profit margin, remaining from stage 3, discounted by indirect labor costs, like costs /profits of stock revaluation, production results, and stock adjustments.

Stage 5 reports the profit margin, remaining from stage 4, discounted by neutral expenses or income like currency differences, compensations from insurances, or other neutral income. The last step is reducing the remaining profit margin from cost center costs. Meaning, the total of the cost unit accounting with easyPMC ends as the same total in the profit and loss statement.

easyPMC is based on MS-Excel, and linked to ERP LN – Finance via Baan-Connector. Balances from GLD with the ledger account and dimensions are copied to an input worksheet in easyPMC. By pressing a button, it is automatically posted to the main work sheets. The integration Logistics/ Finance have to be set up the right way. Since easyPMC is part of the easybaan® product family, the integration logistics/ finance of the easybaan® – golden company is set up for easyPMC.

The ability to analyze the value that every product, sales order, or cost unit contributes to the company gives decision makers the figure to steer the companies in the right direction.

 

⇒ Please check this graphic for a simplified profit margin control.