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Rejections in bill ofmaterial

Tharun (sd) (95 Points)

25 June 2013

Hi All,

While preparing Bill of Material should we give provisions to standard rejections as well?

Thaks in advance.

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3 Replies

CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 12 July 2013

Support your query with example so that reply can be made accordingly.

Tharun (sd) (95 Points)
Replied 12 July 2013

Lets say I wish to compute BOM quantity to produce 1 KG of Cloth. Here I need to know how much Yarn I need to produce 1 KG of cloth. Now, I will consider the process loss that will occur during processing and decide that I will have 200 gms of wastage. Now My BOM quantity should be 1.2 KG. Here I got suggestions from others to add my rejections like 2% of raw material required. Is it correct?