Material Cost Components

This table illustrates how the material cost components A1 and A2 reflect the cost that is incurred from purchased material and from material scrap:

Cost Component	Description
A1 (Purchased Material)	When you enter a cost method in the Purchased Item processing option in the Cost Simulation program, the program uses that cost method to retrieve the cost from the Item Cost table (F4105).
A2 (Material Scrap)	Use the A2 cost component for items for which you defined a scrap percentage in the bill of material. The net-added cost comes from scrap that is incurred when the components are assembled. Component material scrap cost = percent of scrap from the bill of material × quantity per parent item × total cost of the component.