One of the great mysteries is how to calculate labor and overhead so that they are included in your beer costs.
In this post, we’ll simplify labor and overhead costs so that you can solve this cost mystery in your beer business.
The 5 W’s of Labor and Overhead Costs
- Who?
- Designate a person (or team) responsible to keep costs updated: Inventory manager, head brewer, and/or a finance person
- What?
- Update labor rates and total time used in the production process, update expenses related to leases, utilities, supplies
- Where?
- Labor and overhead costs affect inventory value and cost of goods sold, be sure to update both
- Why?
- Understand the total costs to produce and package your beer
- When?
- Update labor and overhead quarterly or semi-annually, or use a brewery management software like Ekos
- How?
- Direct labor (hourly rate x hours), overhead includes all costs directly related to the production and packaging of your beer
For more details on labor and overhead costing, check out the online course Brewery Deep Dive: Pricing and Costing your Beer. It’s included with your subscription to Craft Brewery Financial Training.
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