How to Scrap Raw Material in the Production process and account for it under Scrap Totals

Question

Hi All,

I reviewed some articles and most of them couldn’t answer a very simple Use Case.

In Manufacturing it is very common that more than just screw or other Components Parts are used as they break in the process or other things.

This is technically Scrap that needs (for typical processes) to be logged as Scrap rather than Material Cost against the Production Order.

I can’t seem to find a way to accommodate for that kind of Scrap. Scrapping the FG is just completely overstating and doesn’t let the User adjust.
Utilizing a Scrap Factor just adds to Material Cost rather than considering it as actual Scrap Cost.

I would be very surprised if we cannot accommodate for this at all?
This is just so common. Scrap is not the actual Material Cost but separate from Raw Material Cost and needs to be logged - not only for the FG with Scrap write-off.

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Best answer by cwise52 21 February 2023, 10:35

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cwise52 · Accepted Answer

Good Morning Krausef77,Currently you would need to return the material issue through a production material transactionto stock. Then perform an issue transaction from inventory and use the correct reason code to the desired expense account.I think you raise an interesting topic. If we were to scrap the component part in a material transaction from production, then it would have to become a cost of the production order. This would assume the compart part scrapped was damaged by the MFG floor during production. If that is the case, then adding a reason code to the material transaction would be very helpful.On the other hand, I thought from reading your post, that the material is simply found to be defective and your desire is to not have it become part of the manufacturing expense or variance. In this case, I'm not sure what the solution should look like. I think pie in the sky would be to add to the reason code a check box to indicate the proper expense account and that this material cost is not part of the production order total cost. I did not look to see if that is an enhancement already reported, but would be a great suggestion. :)In the meantime, you would need to return the components to stock through a negative material issue and then dispose of them through an inventory adjustment using the correct reason code.I’m sorry I don’t have something more helpful.Chuck

krausef77 · Answer

Good Morning Krausef77,Currently you would need to return the material issue through a production material transactionto stock. Then perform an issue transaction from inventory and use the correct reason code to the desired expense account.I think you raise an interesting topic. If we were to scrap the component part in a material transaction from production, then it would have to become a cost of the production order. This would assume the compart part scrapped was damaged by the MFG floor during production. If that is the case, then adding a reason code to the material transaction would be very helpful.On the other hand, I thought from reading your post, that the material is simply found to be defective and your desire is to not have it become part of the manufacturing expense or variance. In this case, I'm not sure what the solution should look like. I think pie in the sky would be to add to the reason code a check box to indicate the proper expense account and that this material cost is not part of the production order total cost. I did not look to see if that is an enhancement already reported, but would be a great suggestion. :)In the meantime, you would need to return the components to stock through a negative material issue and then dispose of them through an inventory adjustment using the correct reason code.I’m sorry I don’t have something more helpful.ChuckThank you, Chuck this is very helpful.The Usecase is that the Material was damaged on the Production floor and therefore has to be rolled up into the Production Cost under the Scrap Tab.I appreciate your input and I created a Product Idea here if you want to vote for it.

How to Scrap Raw Material in the Production process and account for it under Scrap Totals

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