01 September 2010
hi experts, one of my client has started his new manufacturing unit... now first balance sheet and P& L is to be audited....
the situation is GP can be calculated only after calculating Closing Stock. and Closing Stock (R.M.+Finished stock + Semi finished stock)can be calculated only after deriving Gross profit due to having some extent of G.P. in Finished and Semi Finished Stock..
i.e. G.P = Sales + Cl. Stock - op. Stock - Production - direct expenses.
my ques. is how will it calculate it gross profit....
For Calculating the Gross profit of Manufacturing Company you required following items Add: 1. Sales 2 Closing stock Less 1 Opening Stock 2 Direct Purchase 3 Direct Labour & Wages 4 Power & fuel then we achieve the Gross profit
01 September 2010
Closing stock of R/M can be valued at Weighted AVG price or LIFO, For semi finished or finished stock, if you are maintaing the process costing system, it can be arrived correctly, the your GP will be as per Ms. Pooja sachdeva explained method
CAclubindia
