Packaging exp. need to consider in calculation of gp?

This query is : Resolved

sushil (Querist)
Follow

18 August 2011 Dear Experts,

we are mfg of dyes in powder form. While selling to customer we use spl kind of bags.

Whether we need to consider the cost of these bags as packaging exp in calculating Gross Profit?

Waiting for your reply

Thanks in advance.

Regards,
Sushil.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
Follow

19 August 2011 it is need to be treated as direct expenses as packing expenses and considered for calculating GP

Sijo Philip

Sijo Philip (Expert)
Follow

19 August 2011 Packing is of Two types :
1. Primary Packing( Part of Direct Cost)
2. Secondary Packing (part of Selling exp)

From ur query it is assumed that the special packing is secondary packing which makes the product more attractive.

Hence the special packing expense may not be considered for calculating GP.

Upgrade to CAclubindia Pro. Subscribe Now!

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
Follow

19 August 2011 I disagree with Sijo Philip. No doubt he is right but as the powder is packed in bags it is primary packing. They are not packing in pouches and then putting it in bags. Had the bags been used as secondary packing then the answer is correct