1. avatar says

    Dear John,
    I have one question about inventory. I hope you will find time to check it for me. CIosing WIP invent. 2000 units, 100% complited for material, 40% complited for labour. Equivalent £12 per unit. So, I have for material 2000unit (100%) + labour 800 unit complited = 2800 unit X £12=£33600 value for units complited WIP. Is that correct? Thank you in advance for your help. Regards

    • Profile photo of John Moffat says

      You need the equivalent cost per unit for both materials and for labour.

      If is is an equivalent cost of $12 per unit for labour, the 33600 is the labour part of the value of the closing WIP. However more information is needed about the material cost to be able to calculate the full value of the WIP.

    • Profile photo of John Moffat says

      Think about this…….suppose we are working on 1,000 units, but only 800 are finished.

      What do you think happens to the other 200?

      They are still there in the process and will be finished next month.

      That is why we need to carry forward 200 at the end of this month and being forward 200 at the start of next month.

Leave a Reply