G.P. of manufacturing unit at its first F.Y.

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pallavi gupta (Querist)
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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....

plz. tell me as soon as possible.

POOJA SACHDEVA

POOJA SACHDEVA (Expert)
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01 September 2010 Dear Pallavi

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

Regards''
Pooja

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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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

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pallavi gupta

pallavi gupta (Querist)
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05 September 2010 thanks for replying.... but still there is a problem dear....

i cant derive Closing Stock until i reduce the part of gross profit from the closing stock of finished goods and semi finished goods.....

and for calculating G. P. i need closing stock...

m i able to describe u the problem now....???

Sales
add: cl. stock of -
Raw Material
Finished Goods - GP
semi fin.- GP - % of completion

less: Op. Stock
Direct Exp.

= G . P .