System Rules for Cost Distribution in InnoVint

InnoVint released an update on Tuesday, June 2, 2020. This new release included a change to the cost distribution algorithm as it relates to direct fruit costs. See below for more details on the system rules and how the update affects direct fruit costs after June 2.

This article covers cost distribution rules for:

Direct Fruit Costs

Prior to June 2, 2020:

Direct fruit costs apply to a juice or wine lot only after the lot, and all related lots, are tracked in volume. While the lot contents are tracked in weight (eg tons), the lot cost will display as 'pending'.

'Related' lots are lots that share a single fruit source in the same vintage. For example, there may be multiple lots that share the same vineyard component due to different processing actions - 5 tons are processed to volume (ie direct to press), while another 5 tons from the same vineyard block is processed to weight (ie crush to tank), then bled via saignée, and finally drained and pressed. All weight must be converted to volume via Juice Bleed/Saignée or Drain & Press action before costs are distributed and applied.

InnoVint calculates the cost per gallon using the following formula:

Cost/gallon = (Total fruit cost of all received fruit from block)/(Total volume produced from block)

The cost per gallon is then multiplied by the volume produced via Juice Bleed/Saignée and Drain & Press actions for each lot.

Fruit Cost Distribution Rules_ OLD

After June 2, 2020:

Direct fruit costs are applied to a lot at the time of the Process action (ie Process to Volume and Process to Weight).

Cost per ton

Fruit costs are determined by the total weight processed from a fruit lot, and then distributed to the juice or must lot(s) in the Process action.

InnoVint calculates direct fruit costs using the following formulas:

1. Total fruit cost = (Tons removed from fruit lot)* (cost/ton)

2. Fruit cost per lot = (Total fruit cost/Total tons processed)* (Tons processed to juice lot)

** This calculation accounts for any difference between the tons removed from the fruit lot and the tons that are processed into the juice lot. For example, 10 tons might be removed from a fruit lot in a process action, but only 9 tons are processed into the juice lot. In this case, InnoVint will proportionally distribute the cost of the 10 tons into the 9 tons, essentially concentrating the overall cost per ton.

Fruit Cost Distribution Rules_ CURRENT

Cost per block and Cost per acre

InnoVint proportionally distributes the cost per block or acre according to the total tonnage received from the block per vintage and the distribution of that tonnage at the process step.

Please note that InnoVint will distribute and apply costs using all the submitted information available at the time of the process step.

For example, if 3 tons from Block X is received and processed into Lot A, the system will apply the total cost per block to Lot A as of the date and time of the process action. If later, an additional 7 tons from Block X is received and processed into Lot B, the system will then proportionally distribute the total cost per block according to the tonnage processed into both Lot A and Lot B. This will require the system to recalculate and update the costs that it previously applied to Lot A. Updates to costs may not be reflected until after the nightly update.

 

Direct Dry Goods Costs

The cost per unit of a dry goods batch is determined by the total amount received and the total costs across all 'Receive' actions for the batch. Cost per unit is not affected by on hand inventory or batch adjustments. If on hand inventory is negative, the batch will also show a negative cost on hand; all subsequent actions using the dry goods batch will continue to remove costs and inventory from the on hand values, and the costs will continue to be added to involved lots.

Additives (Direct)

As additives are used via 'Addition' actions, the cost per unit of the additive batch is directly applied to the involved lot(s). As the wine lot is subsequently transferred and blended, the direct additive costs are proportionally distributed downstream.

Packaging (Direct)

Packaging costs are calculated and reported as part of the Finished Goods costs for each recorded 'Bottle' action. The used and scrap values entered per batch are combined for a total Packaging (Direct) cost. To view the breakdown of used vs scrap costs per 'Bottle' action, download the Bottled Costs report from the Cost Explorer.

Note: Since Packaging (Direct) costs are only added to the Finished Goods costs associated with a specific 'Bottle' action, the Packaging (Direct) costs are not distributed to any remaining, un-bottled volume of the wine lot. Packaging (Direct) costs will not be reported as part of the lot cost history.

Keep in mind that Packaging costs added as a cost item will behave differently than direct costs, and are distributed proportionally as part of the total lot cost. This is the same for all cost items.

 

Juice Bleed/Saignée

If a juice bleed/saignée is recorded on a lot, InnoVint will wait to apply costs to the bleed volume until the parent lot is in volume (ie after Drain and Press). The cost of the bleed volume is proportional to the cost of the total volume produced by the lot. The total volume produced is equal to the bleed volume plus the drain and press volume.

Lot Cost = (Total cost/ Total volume produced) * (Volume produced per lot)

For example, a juice/must lot has a total lot cost of $10,000. A bleed action recorded on the lot produces 50 gallons. Later, the drain and press action produces 750 gallons, resulting in a total volume of 800 gallons produced.

Lot cost for Bleed volume = ($10,000/ 800 gal) * 50 gal = $625

Lot cost for D&P volume = ($10,000/ 800 gal) * 750 gal = $9,375

 

 

Volume gains and losses

Lot costs are distributed proportionally by volume as wine is moved, blended, or split into other lots. Volume gains and losses are expected as a result of these movements.

Inventory gains and losses do not carry any costs. In the case of losses, the lot costs are concentrated into the remaining volume and the cost per gallon increases. The opposite occurs when there is a volume gain (ie the lot costs are spread across the new volume).

 

 

Shrinkage

In the event that a volume loss needs to carry costs, the loss must be recorded via Volume Adjustment action with the reason 'Losses other than inventory'. This action will reflect as 'Losses other than inventory' on the InnoVint-generated TTB 5120.17 and the costs will be classified as 'shrinkage' in costing reports.