03 November 2018
We have just started with Job Work in our factory. The principal issues material and informs us quantity of pcs to be made from the material, however, with our manufacturing efficiency we save some material. We wanted to know how can we account this material. Eg. Principal issues 100Ton steel and we have agreed to produce 10000 pcs from the same. Further, after processing 10000 pcs, we generate 4 tons scrap and 1 ton steel fresh is saved. Now how do we account for this 1 ton steel. Consideration paid is per pcs, however, we complete the challan by entering the full weight of 100tons. We sell the scrap as that is allowed and in general process, but for fresh steel we are not able to understand the accounting.
customer agreed to get certain pcs in some raw materials. customer have no object that how much you have utilized or scrap . if he considered his pcs like 1000 pcs and does not want to return back balance materials than fresh pcs is your own materials and you also treat this as scrap .
if customer want to return back his balance materials than you have to return on delivery challan .
CAclubindia
