The accounting profile of an extraction operation
Raw material, work in process and finished goods coexist, and value moves between them constantly as biomass becomes crude, distillate and finished product.
- Multi-stage inventory with value transferring at each conversion
- Yield sensitivity that swings unit cost more than purchasing does
- Joint and by-product outputs requiring a documented allocation basis
- Capital-intensive equipment with depreciation flowing into production cost
How we work with manufacturers
We install the cost structure first, then run it as part of the monthly close so unit economics are current rather than annual.
- Run-level yield and conversion cost tracking
- Normal versus abnormal loss separated in the model
- Tolling arrangements mapped to correct inventory ownership
- Packaging and compliance testing captured as inventoriable cost
Producer treatment under 280E
Manufacturers capitalize a wide band of indirect production cost: production-space utilities, equipment depreciation, quality control, in-process testing and production supervision. The line to defend is the boundary between production and selling.
Working with Missouri partners
Many Missouri manufacturers process for third parties or supply brands that hold no license of their own. Each arrangement changes who carries inventory, so we review agreements before the accounting treatment is set.
Frequently asked questions
How should joint products be costed?
On a rational and consistently applied basis, most often relative sales value at the split-off point, with the methodology documented in advance.
Is equipment depreciation inventoriable?
Depreciation on production equipment is generally an allocable indirect production cost. Depreciation on office or sales assets is not.
