BOM OF ROH Material

[former_member541431]

Dear Expert

We are purchasing material "X" from vendor & in standard cost run system considering RM cost .

Due to non availability of material " X" the client decided to manufacture it from subcontractor. then he maintain special procurement key 30 & BOM for same material. so the cost of component and sub contract cost will be capture during standard cost run.

means material"X" ( MType-ROH) can be procure from market or can be process at subcontract.

My question is " is this process of maintaining BOM For ROH is wrong practice "? is their any Limitation?

with regards.

[JL23 · Accepted solution]

there is no real right or wrong.

ROH or FERT or ZZZZ this is just a name of a material type. the music is playing in its customizing and if everything is well customized then it works technically.

The issue - if any - is more from a logical point of view. What people in your company understand when somebody talks about ROH.

We have an internal rule that everything that is produced inhouse has to be FERT, and if the same material is also procured from outside then this is covered via split valuation, where we differentiate between own and external.

Nobody in our company would expect to produce a ROH inhouse as it is common sense to us that a ROH is always external procured and FERT internally except we have to high demand and need to source from competitors.

But this is just a question of design...and customizing and rules build based on that design.