Bill of Materials


Before starting to manufacture or disassemble products we need to make sure that we have Bill of Materials (BOM) specified for such products. This specifies the component products that make up the larger product. 


Prerequisites:


  1. Create an item with Bill of Materials
  2. Bill of Materials Settings



Create an item with Bill of Materials

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The assembly/disassembly function can only be used with items that have a Bill of Materials showing their component parts.


NOTE:  To create a product with a Bill of Materials, the component products must already be created in DEAR. 


To add Bill of Materials to an item:

  1. When creating a new product or editing an existing product, check the Bill of Materials box in the document header


  1. This activates the Bill of Materials tab below. Use + Component to select the component products from your inventory. 

  2. Enter the Quantity of each component product that makes up the larger component and the Quantity to produce (1 is the default)

  3. Enter a Disassembly Cost percentage, Wastage Percentage and Wastage Quantity if required (see below for more information.) 


  1. Service items associated with the assembly/disassembly can be included by clicking + Labour and Overheads. It is required to include an Expense Account.

  1. Save the product to complete



Bill of Material Settings

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Auto-assembly/Kit

When this check box is applied the finished good will be produced automatically after the sale order is authorised, assuming there are enough components in stock.

 

Auto-disassembly

When this check box is applied the products are disassembled automatically after the purchase order for them is completed. Auto-disassembly is only recommended in the case where you do not sell the assembled product.  Only FIFO, FIFO-Batch and Special-Batch costing methods support auto-assembly/disassembly.


Quantity to produce

Enter the yield for the BOM. 1 is the default.


Assembly Instruction URL

Enter a URL showing assembly/disassembly instructions for the product, if applicable. 


Cost is estimated using:

  • Average Cost

  • Latest Purchase Cost

  • Fixed Purchase Cost


Note : This is for your reference only. Total cost in BOM is an estimate only. The actual cost of finished goods will be calculated using the costing method of each individual component and can vary from "Total" cost displayed in the BOM.


Wastage % or Wastage Quantity (if applicable)

Wastage % and Wastage Quantity are mutually exclusive. If some of the components are wasted during assembly, use these fields to include that information.


Disassembly Cost %

Indicates what percentage cost each component product makes up of the parent product.


By default DEAR splits the cost of the parent product equally between product lines in disassembly. However you can set rules on how DEAR needs to distribute the cost of the parent product among the components. The total must equal 100%.


Example: Product A is disassembled into 2 x Product X and 1 x Product Y.


If product A has $100 cost, the default settings in DEAR will set $50 for Product X line which will be split among 2 items giving the cost of $25 per each instance of Product X and $50 for Product Y.


Suppose that you wish to set your own rules. You estimate that the cost of the product Y will be $80 and the cost of the product X will be $10 each. Your disassembly cost percentage will be 20% for the first line (product X) and 80% for the second line (product Y).


Labour & Overheads

Non-inventory items (Service Type products) are added to the BOM in this section. Add Quantity, Expense Account used to accumulate these expenditures and Price Tier used as a cost basis. If you do not have a standard rate for the Expense you can always enter in actual amount during production.