Re: Scrap in Cost of Sales

Al,

If you have yield factors in the bills-of-material, then your scrap costs 
are part of your standard cost. When you originally set up BPCS you must 
have put the yield factor on the finished goods, which inflated the shop 
order requirements (and std. costs) to compensate for the anticipated 
loss. 

One thought I might have for you would be to set your scrap percentage as 
a "by-product", or "co-product" (depending on how you want the costs to 
break out) in the B/M. The co-product designation would separate the cost 
for the specified percentage of scrap from the "good" product (problem 
would be that you would end up with an on-hand balance of a scrap item, 
but you would have it "captured" If the scrap had an salvage value, you 
could reflect it in the price of the scrap item). The by-product would 
assume that the scrap item has no value, and may actually add cost to 
dispose of it.




Al Mac <macwheel99@xxxxxxxxxxx> 
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09/15/2005 12:06 PM
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Subject
[BPCS-L] Scrap in Cost of Sales






Is scrap (which we report viia labor JIT600 which ends up in RJ 
transactions in ITH) reflected in any cost-of-sales files in BPCS 405 CD, 
that we could data mine?

We also have 8% yield on selected raw materials to compensate for a 
perception that scrap is under-reported.

I run various reports for management
(a) how much $ in some date range involved in scrap, broken down various 
ways
(b) material component cost as a percentage of $ billed
I was recently asked if scrap $ included in cost of goods sold
I am 99% sure that it is not because scrap is part of ACTUAL reporting, 
while our cost reports are based on the STANDARD

When we first setup BPCS eons ago, we put in an expected scrap rate of 2%, 

but that led to MRP telling us to make 2% extra across the board, which we 

did not want, so we took that out of our standard.

We have sub-components in our BOM structured so that they could 
conceivably 
end up on more than one customer # of end item, but I guess we could look 
at actual sales of those end items in the month of production, and the 
following month, and pro-rate the scrap as probably being for a customer 
with concurrent activity.

I am looking for ideas to get a report that shows cost of scrap by 
customer 
for some date range.

-
Al Macintyre  http://www.ryze.com/go/Al9Mac
BPCS/400 Computer Janitor ... see
http://radio.weblogs.com/0107846/stories/2002/11/08/bpcsDocSources.html