Here you can choose between two calculation bases for the cost calculation of rejects; Allocate according to standard price or Allocate per operation. Allocate per standard price is selected by default. These alternatives do not apply to material withdrawal, just to operations.
Allocate According to Standard Price
This alternative is divided into a material portion and a processing portion. The standard price is calculated in the Pre-Calculation or Pre-Calculation Selection procedures, and can be saved to the part register. The standard price and the breakdown of the standard price can be seen in the Update Part procedure.
When rejections appear in the first operation of a part, the cost will be the material portion multiplied by the reject quantity, since the material is considered lost. When rejections appear in the last operation of a part, the cost will be the standard price multiplied by the reject quantity. If rejections appear in an intermediate operation, the cost will be the material portion plus half of the processing portion: the total of these two portions multiplied by the reject quantity.
Please note.Do not use Allocate according to standard price if the material applies to another operation than the first one, or if the operation list is extensive or if it contains just one operation. Use the Allocate per operation alternative instead.
Distribute Operation
This alternative calculates the planned cost up to the rejected operation from the order. Here you calculate and view the material cost, subcontracting cost and processing cost. The Allocate per operation alternative will always consider the cost factor and prices from the order, and from the settings SO and SC. You select the cost factor alternative under the Create tab.
Please note. If a part in the BOM list has SO mark-up exception in the part register, the SO mark-up exception will override the general SO mark-up.
Please note. Errors might also occur in this calculation. For example material defects and subcontract rejects might not result in costs, if the supplier is responsible for the direct costs. It is difficult to estimate the actual cost, since the company might have to bear the cost for material and operations although the subcontractor has destroyed the part.