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Sep 16, 2011 at 09:59 PM

Rejection and Regrinding cost of material

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Dear Experts,

I have query on regrinding of plastic. Pl find below the scenario

1. I produced 10 nos of Finished goods

Cost of Each FG is $10

(FG Cost Break up -RM Cost $7 and Labour $3)

2. After production , quality has rejected 2 nos of FG and passed 8 nos of FG

3. Rejected stock of 2 nos are moved to rejected location

4. Subsequently Rejected FG stock, was regrinded and additional labour cost of 2$ incurred

5. Now this Regrinded material will be used as part of raw material to produce the FG.

6. Subsequently client has produced the FG using the regrinding material, during this process he incurred Labour cost of $3

Pl let me have your inputs, as to how costing will be captured in this scenario.

Thanks

Sanjai