Bill Of Materials - BOM

AAA

DEFINITION of 'Bill Of Materials - BOM'

A comprehensive list of raw materials, components and assemblies required to build or manufacture a product. A bill of materials (BOM) is usually in a hierarchical format, with the topmost level showing the end product, and the bottom level displaying individual components and materials.

BREAKING DOWN 'Bill Of Materials - BOM'

Bills of materials come in different types specific to engineering (used in the design process), manufacturing (used in the manufacturing process), and so on. A manufacturing BOM is of vital importance in materials requirement planning (MRP) and enterprise resource planning (ERP) systems.

A BOM "explosion" displays an assembly or sub-assembly broken down into its individual components and parts, while a BOM "implosion" displays the linkage of individual parts to an assembly.

RELATED TERMS
  1. Flexible Manufacturing System - ...

    A method for producing goods that is readily adaptable to changes ...
  2. Manufacturing Resource Planning ...

    An integrated information system used by businesses. Manufacturing ...
  3. Materials Requirement Planning ...

    One of the first software based integrated information systems ...
  4. Economic Order Quantity - EOQ

    An inventory-related equation that determines the optimum order ...
  5. Enterprise Resource Planning - ...

    A process by which a company (often a manufacturer) manages and ...
  6. Supply Chain

    The network created amongst different companies producing, handling ...
Related Articles
  1. Fundamental Analysis

    Vital Link: Manufacturing And Economic Recovery

    Manufacturing output is one of the clearest signs that an economy is recovering from a recession.
  2. Economics

    Explaining Double Entry Accounting

    Double entry is an accounting and bookkeeping term describing the method of entering transactions into the accounting records.
  3. Economics

    What's an Allowance for Doubtful Accounts?

    The allowance for doubtful accounts represents the percentage of the accounts receivable the company expects to write-off as uncollectible.
  4. Economics

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
  5. Economics

    Understanding Accounts Receivable Aging

    Company managers use accounts receivable aging reports to monitor overdue accounts.
  6. Economics

    Explaining Accounting Profit

    Accounting profit is the net earnings of a business as calculated under Generally Accepted Accounting Principles (GAAP).
  7. Economics

    Explaining the Accounting Equation

    The accounting equation is the basis for double-entry accounting, and requires that every business transaction affect two accounts equally.
  8. Taxes

    Understanding Write-Offs

    Write-off has different meanings depending on the context in which it is used, but generally refers to a reduction in value due to expense or loss.
  9. Fundamental Analysis

    What is Year-to-Date?

    Year-to-date (YTD) is a term that describes financial results from the beginning of the current year up to the day the financial number is reported.
  10. Economics

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
RELATED FAQS
  1. How is a Limited Liability Company (LLC) taxed?

    To generate financial states using grouping schedule codes for trial balances, bookkeeping and double-entry bookkeeping requires ... Read Full Answer >>
  2. Does location matter for taxes when calculating gross sales?

    Tax policies regarding gross sales differ by state and region. Some city jurisdictions, counties and states require a percentage ... Read Full Answer >>
  3. What is the best software for calculating trial balances?

    Trial balance software is used to generate reports comparing the total debits and total credits in a double entry book keeping ... Read Full Answer >>
  4. What's the difference between a trial balance and a balance sheet?

    There are many differences between a trial balance and a balance sheet. For example, a trial balance is an internal report ... Read Full Answer >>
  5. What's the difference between a trial balance and an adjusted trial balance?

    A trial balance is a simple accounting report that gives a picture of a business at periodic intervals, such as monthly or ... Read Full Answer >>
  6. What is the difference between an accrual and an account payable?

    The difference between an accrual and an account payable is that an accrual is an accounting adjustment for revenue that ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!