Account for Component Scrap in Work Order Costs Without Material Returns

You can now scrap an already issued component to a work order without having to do a component return. You can move the scrapped item to a specific subinventory where it can be reviewed before a final disposition.

New Transaction Types

The scrap transaction uses the standard cost when the item is standard costed or uses the cost at which the material was issued. The accounting entry created for the Work in Process Material Scrap transaction would debit the Inventory Valuation account and credit the WIP Valuation account.

Accounting for Work in Process Material Scrap

The scrap return transaction would use the current cost of the item and debit the WIP Valuation account and credit the Inventory Valuation account type, as shown here.

Accounting for Work in Process Material Scrap Return

The material scrap transaction can help you to accurately account for any material that was damaged during the manufacturing process rather than performing a material return. You can use different accounts to track the component scraps versus component returns, which can help to streamline costing process and improve financial visibility for better operational decision making.

Steps to enable and configure

You don't need to do anything to enable this feature.

Tips and considerations

Scrap and Scrap Return transactions are supported for discrete work orders only.

Key resources

• Oracle Fusion Cloud SCM: Implementing Manufacturing and Supply Chain Materials Management guide, available on the Oracle Help Center.
• Oracle Fusion Cloud SCM: Using Supply Chain Cost Management guide, available on the Oracle Help Center.

Access requirements

Users who are assigned a configured job role that contains the following privileges can access this feature:

• Create Cost Distributions (CST_CREATE_COST_DISTRIBUTIONS) 
• Create Cost Distributions by Web Service (CST_CREATE_COST_DISTRIBUTIONS_WEB_SERVICE)

These privileges were available prior to this update.