on 01-07-2015 4:14 AM
Our Material consumption contains
1)Issues to production-Debit
2)COGM -Credit
3)COGS -Debit
Suppose each Material Cost is Rs.50/- and 3 items has been issued.
Material consumption a/c dr 150 -p&l
Inventory a/c cr 150 b/s
(Being 3 qty issued to production order)
Once the goods is produced
Inventory FG dr 180 b/s
COGM cr 180 p&l
(3 qty of FG is produced and contains 30 Rs value addition which is rs.10/- overheads per each)
When the goods is sold for 2 qty
COGS Dr 120 p&l
Inventory FG CR 120 b/s
(2 Qty sold out of the 3 qty produced)
Now the Material consumption a/c will be
Material consumption against sales -COGM+COGS=90 (150-180+120) which is supposed to be Rs.100(50 Unit Rm cost*2 qty sold)
Hi Rama Krishna,
Your material consumption will be Rs.100. If you look at the above costs in your P&L. They will come as shown below.
Expenses Income
Material consumption 150 COGM 180
COGS 120 Revenue 120
Overheads 30
-------- ----------
300 300
---------- ----------
The over head will charge based on your labour or material cost or some other base. So these expenses are already booked completed. You have to charge proportionate share for the FG from it.
Regards,
Mukthar
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