Bill of Materials Costing for Extraction Products
Every processed product a manufacturer sells, whether a concentrate, cartridge or pre-roll infused with distillate, has a distinct combination of raw flower or trim input, solvents, hardware and packaging that needs its own bill of materials rather than a blended plant-wide average cost. Building SKU-level bills of materials is the foundation for accurate margin analysis and for cost of goods sold that will withstand a federal examination of Section 280E treatment.
We work with production staff to document actual formulations and yields for each product line, then translate that into a costing template finance can maintain going forward without needing to re-interview operations every month.
- SKU-specific raw material and packaging cost inputs
- Labor time studies by production line
- Equipment hours allocated to batch cost pools
Overhead Allocation for Capital-Intensive Extraction Equipment
Closed-loop extraction systems, distillation equipment and laboratory infrastructure represent substantial capital investment that must be depreciated and allocated into production cost pools under Section 263A rather than expensed outright. We help manufacturers choose an allocation base, typically machine hours or batch volume, that reflects how equipment capacity is actually consumed across product lines.
Reconciling Conversion Yield Across Batches
Extraction yield depends on input material quality, extraction method and equipment performance, and yield swings between batches can materially change unit cost even when the bill of materials assumptions stay constant. We implement batch reconciliation reporting that compares input flower weight to output product weight, batch by batch, which supports both internal cost control and METRC-based compliance documentation for manufacturing licenses.
