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Refurbishment Order Costing for Damaged Parts

I have seen lot of posts but still i am not able to get the true concepts of Refurbishment Order.. My Queries are:

Imagine I have 10 Equipments which I have procured and installed at Function Location in NEW status. Each Equipment costs around 1000 Rupees. So Total Costs are settled on the order at the time of Installing. There are no equipments in Damaged and Refurbished Condition as of now. Suppose after 1 year, 3 equipments gets damaged and needs repair. Either Internally or Externally , I have to uninstall the equipments from FLOC and change the Equipment to DAMAGE status and then go for Refubishment. My Question is :

1. How to change the status of Equipment from NEW to DAMAGE.

2. If the Refurbishments costs around 200, then the valuation of the 3 Equipments which went for Refurbishment should be (1000+200 = 1200, since the refurbishment costs should be settled on equipment itself, according to me). Is that OK.

3. Is it that always we have to take the Damaged Equipment Price as 0.01 With Standard Pricing .



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1 Answer

  • Feb 25, 2018 at 07:33 AM

    Hi Manoj,

    Point 1:

    MM Team has to create this Material in 3 different valuation category (New, Refurb, Damaged), so each will have the price maintained. When you are processing refurbhishment order, you will be moving the Material from Damaged to Refurbhished.

    When the maintenance team identifies there is an issue with the equipment, they will replace the equipment with new or working spares and send the defective or damaged equipment to store. Refer below blog which will explain the relation in detail

    Point 2:

    Here, you have mentioned about 1000, which is the price of the new equipment. so it cannot be the price of damaged or scraped equipment.


    New EQ - 1000 with 10 Quantity

    Refurbished EQ - 500 with 2 Quantity (Average price is 250)

    Damaged EQ - 100 with 2 Quantity (say 1 EQ is sent to stores by the maintenance team)

    When we do repairs, maintenance cost was 100 and your damaged material price is 50. During settlement, 100+50 will be settled to material. so Refurbished EQ will become 500+150 with 3 Quantity (Average price 650/3). The Damaged EQ price will be 50

    Point 3

    NO, it cannot be 0.01, it depends on your MM team / Finance team.



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