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How to value regrind on balance sheet in plastic industry? 1

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molly

Industrial
Oct 20, 1999
1
US
I am wondering what approach is taken for regrind (offline trim scrap) inventory valuation. Do you use cost or market value?
Currently we are using cost (of virgin) value for in-house regrind but use market value for regrind returned by customers.
One side of the debate is that everything should be valued at market because once we've processed the virgin it really could not be sold on the market at the original cost of the virgin, it would be sold at market.
However, the opposite debate point is we can use the in-house regrind and customer return regrind in place of virgin, so it s/b at virgin valuation.
I am interested in finding out what other people are doing in your companies. Is there a standard industry practice that is followed? Thanks.
 
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I used to work in a plastic injection molding company and there the regring was valued as the cost of the material it could replace. Some products had an expensive material but we could'nt use any regrind in them so we had to use the regrind in cheaper products. In that case the scrap was valued as a cheaper material. I don't know if that is a standard practice in the industry.
Hope this helps
Francois
 
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