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In an ERP-driven inventory system, BOM (Bill of Materials) management is used primarily to:
AAuthorise vendor payments without approvals
BDecide which auditor to appoint
CSpecify the components and their costs required for each unit produced, enabling accurate material cost computation
DGenerate tax invoices automatically for sales
Answer & Solution
Correct answer: C. Specify the components and their costs required for each unit produced, enabling accurate material cost computation
BOM management defines the components, quantities and costs required to produce a unit. The ERP uses BOMs to roll up total material costs accurately under Ind AS 2 inventory valuation.
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