The bill of material (BOM) lists the all materials required to manufacture a product. A BOM can include materials that have their own BOMs. The BOM determines which materials are costed, and the sequence in which they are costed. The system selects a BOM for the material through the costing variant and its quantity structure determination ID.

The following figure shows how the BOM, the material master record, the valuation variant, and the cost estimate are connected, and shows how material costs are calculated.

For more information about how costs (material and production costs) are calculated, see the following:

For more information about BOMs, see the following sections in the R/3 Library: