Bom costing

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rahul (Querist)
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11 July 2013 Dear CCI Members

During verification of BOM for cost audit i found that the company is including the consumables like cotton,oil,etc. in BOM.and showing it to the Material consumed in cost sheet.
In my opinion consumables should not form part of BOM.
can u kindly tell me whether the company can show consumables in BOM.

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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11 July 2013
BOM means recipe requires to make finished product. it contains all material requires to convert raw material into finished product

For consumable items like oil cotton etc. as you mentioned, it depends upon discretion of Company whether its wants to add in BOM or not.

You may verify genuineness of BOM, by comparing actual consumption with BOM consumption for particular period for these consumables

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rahul

rahul (Querist)
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11 July 2013 As they are showing BOM as a material consumption,that means it will go to direct material but consumables are indirect material.