Why is it that if its 100% complete for materials for O WIP you don't add the units of Opening WIP to the material section, whereas for Closing WIP, even if its 100% complete for materials, you add the units of closing WIP to the materials sections?
This is for Example 2 FIFO in your second video on Work-In-Progress (WIP)
Ask the Tutor ACCA MA
Opening WIP and Closing WIP
7y ago#1If they were already 100% complete, then there is no extra cost being incurred in the current period!!
But the closing work-in-progress had 100% completed for materials, just not for the conversion. So why is the closing work in progress units taken into the calculation of EU whereas not for the opening work in progress?
Also, does this mean that for all work-in-progress, materials are always considered 100% complete and it is the conversion costs that are not fully completed yet and thus satisfies the definition of work-in-progress?
7y ago#3The opening WIP already has all the materials and so there is no extra cost for materials in this period.
The closing WIP will have had all the materials input and therefore there was the cost of the materials in this period.
WIP will always have 100% of the materials (unless specifically told otherwise) and it is the fact that the labour and overheads have not been completed that makes it WIP.
Please do watch the lecture again.
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