Documentation >
MAC-PAC Reference Library >
Financials >
Inventory Accounting >
Key Concepts and Procedures >
Reporting Scrap
Reporting Scrap
The Shop Floor Control module is used to record when material is scrapped. Depending on what option you choose to account for scrap, the Inventory Accounting module may adjust the value of work-in-process inventory and scrap expense accounts based on those scrap transactions. If you choose not to account for scrap, the Inventory Accounting module ignores the Shop Floor scrap transactions and the cost of scrap is only realized at order closure time through material performance and labor and overhead variances.
This key concept discusses calculations in terms of manufacturing orders. In a just-in-time environment, variances are calculated for flow receipts rather than manufacturing orders. Just-in-Time scrap is recorded as unplanned material usage. Depending on what option you choose to account for scrap, the IA module may generate a direct transaction from inventory to the scrap expense account.
Related