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Sep 14, 2010 at 06:30 AM

Standard cost estimate with alternative raw materials


Dear Experts,

how the standard cost estimate will be done where a finished product is manufactured with a set of raw materials where in each raw material has five or six alternative materials.

lets say ten raw materials are required to produce a finished product but each of those raw materials can be replaced with five or six other similar materials. As per my knowledge, a BoM will be created by mentioning one raw material as the main and the other replacements as alternatives.

Now in this scenario, how will the std cost estimate will be done and even if it is done by taking the main raw material into consideration, it is for sure that there will be a diff in the actual and standard which may not be a minor one.

thanks in advance