Microsoft Dynamics 365 Supply Chain Management Functional Consultant Expert — Question 153

A company produces rubber hose. Discrete orders accounts for raw material scrap. The scrap is reported through inventory movement journals.

The company has noticed that most of the scrap that is recorded is due to start up that feeds the hose to the finishing process. In addition, the amount of scrap that is recorded is consistent regardless of the amount of hose being produced.

You need to account for material lost during startup.

What should you do?

Answer options

• A. Enter the consumption amount on the line to match the actual amount used.
• B. Do a case study for the scrap items and enter the average amount of scrap as separate line items on the Bill of materials.
• C. Enter the amount of scrap that is consumed as constant scrap in the Bill of materials.
• D. Enter the amount of scrap that is consumed as variable scrap in the Bill of materials.

Correct answer: C

Explanation

The correct choice is C, as it accurately reflects that the scrap generated during startup is consistent and should be treated as a fixed loss in the Bill of Materials. Option A does not account for the nature of the scrap, while B suggests an unnecessary case study, and D implies variability that does not align with the observed consistent scrap amounts.