I am hoping someone can point out what I am doing wrong with one of my raw material’s valuation. The raw material is 20-foot-long, aluminum extrusion made by one manufacturer, and is cut to 4.95 inches by another manufacturer. The BOM for the 4.95" piece is shown below.
We can cut forty-five 4.95" pieces out of every 20’ extrusion. The buying rate for the 20’ extrusion (4701-000008-002) is 79.89, so valuation rate pulled from the BOM for every 4.95" piece (4701-000009-002) is $ 1.77. Since, we send the 20’ extrusion to another manufacturer to cut there is an additional $5 charge per cut. See the Purchase Receipt below.
I checked the raw materials supplied box. The new valuation for the 4.95" extrusion piece (4701-000009-002) should be $ 6.77. The stock ledger also indicates the valuation should be $6.7755. See screenshot below.
However, when the cut extrusion (4701-000009-002) is used as a raw material for another BOM the valuation rate is only $ 1.77551. See below.
I’ve tried to update costs without any luck. Am I taking the right steps for ERP to accurately calculate the item’s valuation?
Thank you for your patience.