Valuation Rate for subcontracted items

I have a bit of confusion over valuation rate
I buy a 1000mm length Rod for Rs1000 – part number : al-d60-1000
i cut this in to 10 nos –
9 nos – part number : sg-01-w85 – cutting rate per piece is Rs5
1 No - end piece is scrap
what would be the valuation rate for partnumber : sg-01-w85–
is it cutting charge Rs5
or does it include material charge also
please help me on this


As per my understanding, it should also include the material cost along with cutting charges.
So valuation rate for sg-01-w85 would be (1000+5)/9.

Thanks Rasika
let me put a scenario
i order material from a supplier
he sends me the material…(inward)
i pay 1000mm length Rod … Rs1000
it enters the stock and accounting ledger
now i send this material to subcontract
i have given a converion of 1 to 9 in bom
i send him 1 material and he sends me back 9 nos
he biils me 45Rs ( 5Rs per cutting)
now wont the system automatically calculate valuation rate
that is 116Rs