Valuation rate is not coming after subcontracting process

hi all,

I am facing one issue related subcontracting transaction
steps I am following for subcontracting process
1)Item 1-Ring 90 (created and tick supply raw material for purchase)
2)Item 2-Ring 100 (created )
3)BOM Created for first Material Ring 90 Required Raw Material is Ring 100(50Rs)
4)Created subcontracted PO (process cost mentioned 50rs)
5)Transfered Material to subcontracting warehouse and receipt at our warehouse
6)After all I check in system whether valuation rate of Main item (Ring 90) change or not
but its 100rs , It should be 150 rs (100RS Raw Material cost + Process cost 50)
did i miss something??

Thanks in advance


I did the same as you and my valuation rate isn’t updating either.

Have you guys enabled perpetual inventory on your respective instance?



Yes my perpetual inventory is enabled and I am in FIFO evaluation rate.

Okay, the valuation rate will only change after you make the entry to receive the transformed item back from the sub contractor. Do a purchase receipt for the item and check if the valuation rate is updated.



Thank you for your help!

Just to be sure, my scenario for example :

I buy 10 kg of fresh apple at 1$/kg
I need to dehydrate the apple (via sub-contracting)
10 kg of fresh apple give 1kg of dried apple. (costing 50$ in subcontracting)

I do a BOM list with dried apple as my item and fresh apple as required raw material.

In the BOM, which rate do I put for my raw material : the buying price or the dehydratation cost?
If I put the buying cost where do I put the dehydratation cost?

Thanks for your help.

You don’t need to put the costs in the BOM. You can leave it as 0 or null. As you make transactions, your raw apples will be sent over to your sub contractor at $10.00.

Since you have a BOM to connect up the Raw and the desiccated Apple, as you make the purchase receipt for the dried apple, your dried apple will assume a valuation of $60 per kg ($10 for raw apples and $50.00 for the desiccation). You may have to go to the BOM and click up Update Cost to get the BOM costs to get updated.

Proceed on fearlessly. :slight_smile:



Hi Jay,

Thanks for your help so far! Here is what I did and it still doesn’t work. Do you find something I did wrong?

PS : You might need to download the image to see it completly and clearly.

Quick question:

In Subcontract section of Buying Settings what have you selected for the field Backflush Raw Materials of Subcontract Based On? BOM or Material Transferred for Subcontract?

Have you used the BOM to send raw materials to the Subcontractor?



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Hi Jay,

In Buying settings I am now on “Material transferred for subcontract” and it still doesn’t work. Yes I have used the BOM to send raw material to subcontractor.

Ive tried different things for 10 hours and it still doesn’t work, I don’t know what to do anymore.

I finally succeed to have the good valuation rate by importing BOM individually in each material transfer to subcontractor. Thank you for your help.


Can you please elaborate on what you did?
This process used to work for me on v11 but for some reason the valuation of Subcontracted item is not including the cost of Raw Material supplied in v12

In ‘Buying Settings’, under SUBCONTRACT section, Backflush Raw Materials of Subcontract Based On’ must be set to BOM.

Then the item received from the subcontractor would include the cost of raw material supplied plus the amount paid to subcontractor.

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