Bill of materials definition
/What is a Bill of Materials?
A bill of materials is the record of the raw materials, sub-assemblies and supplies used to construct a product. It contains a description, unit count, and scrap estimate for each line item. This document must be extremely accurate. If this is not the case, an organization may order incorrectly from suppliers and pull the wrong items from stock for a production run, which can result in major delays in the production process.
Related AccountingTools Courses
How is a Bill of Materials Used?
The bill of materials is used to calculate the cost of a product, as well as to order parts from suppliers. It is an essential requirement when an organization is using a material requirements planning (MRP) system.
Terms Similar to Bill of Materials
A bill of materials is also known as an assembly component list.