Accounting Rejection

manjusree

Hi,

In our company, so many components are getting rejected during the production process. To account these materials, what we are currently doing is after posting consumption, we will put rejected quantity with minus sign in production journal and change the location and bin to 'Rejection'. My doubt is that will this cause any issue in item's cost. Since it is a positive entry to Rejection location, posting will be done with current unit cost of the items. Is it the right way to do this?.

Thanks in advance,
Manju

chengalasettyvsrao

Generally manufacturing processes may in fact result in an output of additional materials/items. When this is the case, the output goods are regarded as by-products and represent an increase of the raw material/finished goods inventory. To receord this by product qty We will use the Consumption Journal with negative Qty . It will have the Impact on Finished Item cost .

I suggest you create the new item in Cronus and post the transcations what you explained , you will come to know.