You have a bill of materials (BOM) item. All lines of the BOM item use a constant scrap amount and a variable consumption. You identify that when you have a
production run of 100 items, the scrap cost is 10 US dollars and the unit cost is one US dollar.
You need to identify what will be the cost in the BOM calculation when you increase the size of production to 200 units.
Which cost should you identify?
A.
2,100 US dollars
B.
210 US dollars
C.
220 US dollars
D.
2,200 US dollars
Explanation:
200* (1+0.10) = 220
* ScrapWaste that occurs during the manufacturing
process. Scrap can occur from mistakes in
measuring, as well as from leftover pieces
due to trimming or other processes. For
example, if a finished good requires 6 cm of
wire, you may expect that you will have to
scrap 1 cm of the wire for every 6 cm that
you use because of splicing.