We are trying to take into account production yield/scrap into account for our standard cost when we do a cost roll. Additionally, we are looking for these factors to be taking into account for planning purposes as well.
I don’t see an field to specify yield/scrap at the part level (maybe I’m missing it) so I looked at the MOM.
I have a part number with a MOM that has all materials related to the first operation. I entered a 10% scrap value on this first operation, did a cost roll, and the labor and burden went up 10%, as expected, but the material cost did not increase at all.
I then went and added a 10% scrap to each material, did a cost roll, and the cost for labor and burden stayed at 10% increase but the material increase 80%.
I have a calling into support as well but I thought I would check with the group.
Am I approaching this correctly, given what I’m trying to do?
JOE ROJAS
Epicor Applications Manager
VENTION MEDICAL + DESIGN & DEVELOPMENT
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You specify scrap factors within a part-rev method at the operation level either by percentage of job-op qty or a pure qty of expected scrap loss per operation.
When I tried this I got the expected outcome for the labor and burden costs but the material cost was unchanged.
I was hoping that where the materials were associated with the first operation, that Epicor also increase the material cost by 10%.
JOE ROJAS
Epicor Applications Manager
VENTION MEDICAL + DESIGN & DEVELOPMENT
DIRECT: 508.597.1392 x1625 | MOBILE: 774.826.9245
It may indeed not help you that way (Material cost) with the a standard cost roll Joe. I’m not aware of a loss factor for the material that impacts rolled cost. You could ‘game it’ via the qty per for the material in the MOMs and specify 1.02 per rather than 1 per (for example). That would have the same effect (and if you are living in a standard cost world, the job would indeed be planned to lose 2% of the raw material).
With actual jobs (if you also have Job Yield processing set up & thus reducing the job qty as laborNC>DMRreject>scrap occurs), the net effect ends up with you having a (scrap %) inflated net material cost of actual cost issued to WIP job versus a smaller qty net received. (Unit actual material cost is inflated by the scrap loss.) That works well in our average cost environment.
You wouldn’t want to do both though (as the BOM qty per distortion would effectively double dip material cost on top of any actual scrap yield qty reduction impact).