WIP ( Over head cost controlling using PCC)

[Former Member]

What is the benefit of WIP caliculation?

And also, Is WIP caliculation mandatory?

[Former Member]

hi

this is addition for what previous gurus told, for work in process u need to define result analysis key, through this u have to go for settlement for work in process.

thanks

raj

[Former Member]

Hi Steve, WIP Calculation enables you to value the unfinished stocks of finished products and shall be posted at the time of settlement. If there is no WIP and it is fully delivered, variances shall be posted. As per Global Accounting Standard IAS 2 and as well local GAAP, it is mandatory to value WIP and to be shown in the Financial Statements. Otherwise, the profit arrived at is not realistic. As you are aware, once the Raw materials and activities are performed, the value is shown as consumed and shown in expenditure side of the P & L account. But in the revenue side, WIP only brings in the value of this raw material and activities consumed. Trust this helps much and revert if you need further clarification! Cheers!

[Former Member]

Hello. WIP calculation is not mandatory.

The WIP calculation function valuates the unfinished products (work in process). So the main benefit is the valuation of the differet product under fabrication.

Overhead costing is the means by which you allocate indirect costs to the appropriate objects. This involves applying a percentage or quantity-based fixed amount to a specified cost base. To apply overhead, you use primary cost elements that were posted directly to the order. In the manufacturing industry, for example, these are usually the labor and material costs.