Subcontracting / Outsourcing of Production process

Question

Dear Team,
We have taken Manufacturing Module recently on our BYD recently.
but we are unable to define / locate out sourcing process in system.
Complete Scenario described as below
Procurement of Raw Material ---> BOM ---> BOO (two step) --->Quality Check ---> & Finish Goods.
In this we have Two step BOO (cost loaded through resources)
In-house Processing
Milling (Cost = Rs 10/-)
Drilling (Cost = Rs 10/-)
Sub-Contracting Processing (we pay below cost to contractor who process goods in his premises)
Hardening (Cost = Rs 15/-)
Blackening (Cost = Rs 15/-)
Unable to sort out below queries :
* Sub contracting cost is billed two times (in purchasing as cost center & in BOO Processing),
   which means if actual Cost is Rs 50/-, additional Rs 15/- cost loaded through PO)
* If we remove subcontracting process from BOO then we loose track of production process (still production cost of material is not calculated anywhere)
Experts.....
Please give your valuable suggestion.
Regards,
Vishal Kambare
Message was edited by: Caetano Almeida - Personal information removed, according to the SCN rules of engagement

Answer 1

Hi Vishal,
not sure if I understood correctly, because costs from a BOO are not billed. However I think you want to avoid that costs are collected on the one hand side based on resource rates and via purchasing.
Maybe you could try the following:
- create two resources, one with a cost rate reflecting the subcontracting and another w/o a cost rate.
Then create two alternative production models with either of these two resources.
- Use the production model w/o a cost rate for poduction
- Use the production model with a cost rate for material cost estimate. You can give this production model a higher priority for product costing.
Hope this helps.