Good Day,
For a Business we have 100kg of scrap will giving an output of 98kg circle and 1kg chitta.
How do I handle the same in Production orders since Multiple Finished items is not available.
What is the work around for the same.
You could do a Journal Entry, but first you need the book value of the 100 kg Scrap (avg cost x qty) and how to pro-rata that value over the other two items. So if the Scrap is worth 150 you might give 130 to Circle and 20 to Chitta. The Journal Entry Account for all three would be Inventory on hand with Scrap being a Credit and the other two being Debits
1 Like
I am curious about your situation. Where did the scrap come from and why is it in your inventory system (if it is). If this is truly scrap from other production operations by your company, it has no value, because it was never acquired or produced as an inventory item. So, if you want to use it as input to a second production order, you have to push the valuation process backwards in time to whatever manufacturing operation generated the scrap. Now, you have two production operations that both produce multiple outputs.
Or, the first production operation should be reconsidered so it does not produce scrap, but produces circles and chitta in addition to whatever it was producing before. You still have the challenge of multiple outputs, but only one production operation on which to deal with it.