Customer supplied material- an issue

[Former Member]

Hi Experts,

I am facing an issue with customer supplied material which is not a regular one.

Here I am procuring raw material which is used to produce a semifinished material. Our client has a contract with a customer that they will pay for 22% of RM purchase cost ( based on GR) and will take 12 % of the semifinished product. Sale of this semifinished product will only include a conversion charge which is fixed for the year.   Rest 88% of the semifinished product will be used by my client's production process.

This is totally MTS scenario ie there is no link with SO and raw material consumption and production.

Normally , we treat customer material is treated with zero value which is not the case here

In this case how to handle the sales process and revenue posting? Experts , kindlt suggest suggest

Regards,

[Lakshmipathi]

I am not clear with your explanation.  If my understanding is correct, the process is

• Your client is purchasing from their own customer (will be treated as a vendor) some raw material @ INR 100.00
• Out of this, your client will do MIRO posting for only INR 22.00
• Balance 78% (you have mentioned 88%) will be utilised for own purpose and will be sold to other markets / customers also

Let me know if this is correct.  If not, explain with an example

G. Lakshmipathi