Sale of scrap- accounting

[Former Member]

Hi All,

After searching in the forum, I could not found the answer so it is the fresh post.

We are using in one of our production process the blasting iron balls. After use these balls become undersize and no longer usable for the blasting process.

These undersize balls are then sold as scrap.

These balls are ROH and base unit is Kg. the undersize balls as scrap are also sold in kg

Query:

1) Is it required to create a new material type for scrap?

2) Do I have to make material to material transfer using mvt 309.

3) How the link/connectivity between the original balls and scrap balls can be established as I have to reflect in the system that these scrap balls have originated from the fresh balls after use.

Also there weight will also undergo change, example 100 kg fresh balls after use is equivalent to 50 kg of undersize balls.

Say if I create a new material type for scrap and load the stock using 561. Then there will be 2 different materials but actually it is 1 material only.

From audit and inspection point of view, the process should be self explanatory.

If we see from accounting prospective it has to hit consumption account when used in production and revenue account when sold. Means we should be able to know that 50 kg has been consumed in production and rest 50 kg is scrap.

Please suggest the correct way and right movement type to handle this case and right way of handling its accounting.

regards

[Former Member]

not answered

[Former Member]

This, in the strictest sense not really SCRAP. This is more like a catalyst. This should also be a part of the production cost. There is awork around for this. We handled a simillar type of issue in one of the implementation and I am trying to recollect. May be I can outline the approach in at a high level and u can develop the same further.

[Former Member]

For these balls, there should be a life cycle. For example they can be used for 2 or 3 after that it will become undersized balls. Is there any relation ship like this?

[Former Member]

Dear Kamal,

there is no direct relationship like this. we put this balls in the machine and this machine operates 24 hrs. there is a sieve in the machine, after every shift end the operator will filter out undersize balls whatever are there and if required add the new ones as per the control indicators on the machine.

then the helper will shift this undersize balls to a bin.

regards