What each product actually costs, what work in progress is really worth, and which lines make money. Management accounting rather than bookkeeping — done monthly by a Chartered Management Accountant. From £199 + VAT.
Book a 30-minute initial review →Most owner-managed manufacturers price by looking at materials, adding something for labour, and checking what the competition charges. It works well enough to build a business on. What it doesn't do is tell you which lines are carrying the others.
This is the difference between bookkeeping and management accounting, and it is the reason CIMA exists as a separate qualification. A bookkeeper records what the factory spent. A management accountant works out what each thing you make actually costs.
Direct materials and direct labour are straightforward. The judgement is absorption — how factory rent, supervision, machine depreciation, power, setup time and quality costs attach to each unit.
Spread them evenly and the arithmetic lies to you in a specific direction: low-volume, complex, setup-heavy products look far more profitable than they are, and high-volume simple ones look worse. Which is precisely backwards, and it's why firms sometimes chase the work that's losing them money.
WIP should carry materials plus the labour and overhead absorbed to that point. Value it at material cost alone and you understate both stock and profit — and monthly results start swinging according to how much unfinished work happens to be on the floor at the month end.
If purchases go straight to cost of sales whether or not the material has been used, and stock is only counted at year end, then each month's profit measures what you bought, not what you sold. Adding a monthly stock movement usually removes most of the volatility on its own.
When margin slips, the useful question is whether it was price, usage, labour efficiency or overhead recovery. Without variances you get a number that's worse and no idea why — so the response is guesswork.
If the immediate question is pricing rather than reporting, that can be a defined piece of work on its own: build the cost model, establish the true cost per unit or per job, and show margin by line. It typically changes what an owner does the following week — and it's the single most useful thing a management accountant does for a manufacturer.
Quoted after the free initial review, because it depends entirely on how many lines there are and what state the data is in.
Owner-managed manufacturers and engineering firms roughly £200k to £5m — subcontract engineering, fabrication, food production, plastics, print, assembly. Typically businesses where the owner knows the total profit but not where it comes from.
Work runs on your existing Xero. We're in Northamptonshire, so Corby, Kettering, Wellingborough, Peterborough and the surrounding counties are in person where that helps.
Bookkeeping is £199 + VAT a month, fixed. Management accounts, costing reviews and Virtual FD support are quoted after a free initial review. See what UK bookkeeping typically costs.
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