there's a context menu, salvage ingots, salvage cloth, salvage all.
I prefer to keep my stuff separate and don't use 'salvage all'. Apparently that instinctive choice saved me some grief when they first came out. People lost stuff through bugs with it.
For bones use 'salvage cloth'. It won't find your tools unless they're in your main pack though.
It recycles the lot in one action, unlike the uoa recycle agent which does each individual piece.