A company produces rubber hose using Discreet orders accounts for raw material scrap after report as finished through inventory movement journals.
The company has noticed that most of the scrap that is recorded is due to start up that feeds the hose to the finishing process. In addition, the amount of scrap that is recorded is consistent regardless of the amount of hose being produced.
You need to account for material cost during startup.
What should you do?
A. Do a case study for the scrap items and enter the average amount of scrap as a separate line items on the Bill of materials.
B. Enter the amount of scrap that is consumed as constant scrap in the Bill of materials.
C. Enter the amount of scrap that is consumed as variable scrap in the Bill of materials.
D. Enter the consumption amount on the line to match the actual amount used.
