Bill of material is the part of a product structure listing the materials in a product. Information is included for each material regarding, for example, quantity included, wastage per operation in which the material will be used.
Information regarding materials contained in the bill of material is used in several different ways, of which the two most common are:
Material consumption in planned orders when calculating material requirements and for manufacturing orders during production activity control.
Product costing, where direct material is based on the price, quantity, and wastage percentage included in the product.