Gourav Kapoor
(CA Final Student)
(2977 Points)
Replied 02 March 2011
Lets start a ques to understand the concept of working capital
Ques :
Particulars Rs. Per Unit
Material 5
Labour 3
OH 2
Selling Price 15
Closing Stock
- WIP 5000 units {material 100% and labour 50%}
- FG 4000 units
Opening stock Nil
Sale 10000 units
Sol:
1st of all draft cost sheet it will make the ques easy
Lets take three different situations to make Cost sheet
|
Cost Sheet |
Consider Complete & Incomplete units Both |
Consider only complete units |
Consider only sold units |
|
I |
II |
III |
|
|
Material |
95000 |
70000 |
50000 |
|
Complete => 14000 X 5
Incomplete => 5000 X 5 |
Complete => 14000 X 5 |
Sold => 10000 X 5 |
|
|
Labour |
49500 |
42000 |
30000 |
|
|
Complete => 14000 X 3
Incomplete => 5000 X 1.5 |
Complete => 14000 X 3 |
Sold => 10000 X 3 |
|
PRIME COST |
144500 |
112000 |
80000 |
|
Factory OH |
33000 |
28000 |
20000 |
|
|
Complete => 14000 X 2
Incomplete => 5000 X 1 |
Complete => 14000 X 2 |
Sold => 10000 X 2 |
|
Gross Works Cost |
177500 |
140000 |
100000 |
|
(-) Closing WIP |
37500 |
- |
- |
|
Net Works Cost |
140000 |
140000 |
100000 |
|
(-) Admin. Expenses |
- |
- |
- |
|
Cost of Production |
140000 |
140000 |
100000 |
|
(-) Cl. FG |
40000 |
40000 |
- |
|
Cost of Goods Sold |
100000 |
100000 |
100000 |
|
Sell. Dist. Expenses |
- |
- |
- |
|
Cost of Sales |
100000 |
100000 |
100000 |
|
Profit |
50000 |
50000 |
50000 |
|
Sales (10000 X 15) |
150000 |
150000 |
150000 |
|
RESULT |
|
Gross Works Cost
=
Cost of Production |
Gross Works Cost
=
Cost of Sales |
Points to keep in mind
1. Co. ne decide kia that we will keep material in godown equal to 3 months consumption
The ques arises here that wch consumption will we consider now ?
As per Cost Sheet I or II or III ?
The answer is I cz hmne vahan complete aur incomplete ubits ko consider kia hai
2. kya esa b ho skta hai k all 3 cost sheets me material cost same ho ?
Yes esa possible hai
When ?
Jb opening & closing stock same hoga
How ?
Lets continue above example, the following info is also given
Stock Opening Closing
WIP 3000 3000
FG 5000 5000
Now calculate production
Production = Sales + Closing Stock – Opening Stock
= 10000+5000-5000 => 10000 units
NOTES :
- Agr opening & closing stock same hai, Material cost is SAME
- Agr opening & Closing Stock differ hai, Material Cost is DIFFER
|
Particulars |
Cost Sheet No. |
|
|
If Opening Stock = Closing Stock
(Level of activity) |
III |
|
|
|
WIP Exists |
WIP not Exists |
|
If Opening Stock ≠ Closing Stock |
I |
II |
|
Newly commenced business |
I |
II |
Relationship of Items :
|
ITEM |
RELATION WITH |
|
Stock of Raw Material |
Raw Material Consumed |
|
Stock of WIP |
Works Cost |
|
Stock of FG |
Cost of Production |
|
Debtors |
Credit Sales |
|
Creditors |
Raw Material Purchased |
|
O/s Expenses |
Total Expenses |
Working Capital vo paisa hai j ohm bank se credit pe lete hain
Ek product ki cost Rs. 8 per unit hai
Aur sale price Rs. 10 per unit hai
Ab bank hme Rs. 8 per unit k base pe credit dega
Ab agr is per unit cost me depreciation Rs. 2 per unit hai to bank hme Rs. 6 per unit k base pe credit dega
Conclusion ye niklta hai k bank hme na to profit pe credit deta hai aur an hi depreciation pe
Working Capital Estimation 2 basis pe hoti hai
- Total Cost Basis
- Cash Cost Basis
Total cost basis me hm profit aur depreciation dono ko consider krte hain
Cash cost basis me Profit aur dep. Consider nai hoti
Jb cash cost basis pe WC extimate krte hain, tb 3 items me change aata hai
- WIP
- FG
- Debtors
Gourav Kapoor
(CA Final Student)
(2977 Points)
Replied 06 March 2011
sahaj wadhwa
(jjg)
(21 Points)
Replied 28 August 2012
CAclubindia
