# Advice 1: How to calculate work in process

The calculation of the cost of work in progress is carried at the end of the month in the formation of cost and the close of an accounting period. Actual cost of work in progress is calculated using different methods, depending on the characteristics of production. Calculate the actual cost of incomplete production by the allocation of direct costs between implementation and "unfinished" in proportion to the contract value of orders.
You will need
• These financial statements:
• - on the natural volume of work in progress;
• - on the actual direct costs for the month(the account 20 "Primary production").
• A contract for work concluded with the customer.
Instruction
1
Determine the natural volume of work in progress (undelivered orders) inventory at the end of the month. Inventory data are recorded monthly the inventory lists or other documents which the execution of production orders. Identify the contract (estimated) cost of incomplete orders (under contracts on performance of work concluded with the customer) at the beginning and at the end of the month, count the contract (estimated) value of orders completed during the month.
2
Determine the proportion of work in progress in the total number of orders at the end of the month. Calculate it as follows:contractual (estimated) value of outstanding orders at the beginning of the month add the contract (estimated) value of orders completed during the month. Divide the contract (estimated) value of backlog at end of month orders received number.
3
Calculate the actual cost of work in progress. To do this, divide the total direct costs between completed orders and work in progress in the following way.

Take the remainder of the actual amount of direct costs at the beginning of the month, add the total amount of actual and direct costs according to accounting data (turnover in the debit account 20 "Primary production"). Multiplying the total amount of direct costs for the month and the balance the beginning of the month to share work in progress at the end of the month, you will receive the actual cost of work in progress at the end of the month.
4
Specify the accounting policy, the allocation of direct costs to perform and "unfinished". In accordance with the guidelines of MNS of Russia on income tax, you can choose economically reasonable metric on which are distributed the direct costs:the cost of orders (contract, cost estimate, cost the sum of direct costs in a specific order), or physical indicators, if these indicators at different orders are comparable (kilometers, etc.).
Note
Assessment of the balance of work in progress shall be documented in statements of the assessment of the balance of work in progress. This document constitute the whole of the organization, the locations and types of products. The data reflected in the document serve as the basis for the allocation of costs between finished products and "unfinished" – on the one hand, and between different types of products.

Forms of statements are developed by the organization itself, depending on the characteristics of production.

# Advice 2: How to write off WIP

When forming the cost of production and the close of an accounting period it is necessary to carry out the calculation and allocation of the cost of work in progress. Its volume is calculated based on the results of the inventory or documentary method, when evaluating the residues is made on the basis of primary documents.
Instruction
1
Determine the volume of work in progress the results of the inventory conducted at the end of the month. The results reflect in the inventory.
2
Calculate the percentage of WIP in its total volume during the accounting period. For this to the cost of work in progress at the beginning of the month, add the cost of the work performed. Divide the value outstanding at the end of months of work by the resulting number.
3
Distribute the sum of direct costs between completed orders and work in progress production prorated percentage of "unfinished" in the total amount of work. To balance the actual amount of direct costs at the beginning of the month add the total amount of actual and direct costs according to accounting data (turnover in the debit account 20 "Primary production") and multiply them to share work in progress at the end of the month.
4
In determining the composition of the expenses reducing taxable income, do not include the costs attributable to work in progress. Their value will be on the balances on account 20 "Primary production" (the account 23 "Auxiliary production", 29 "Service production").
5
Reflect incomplete production in account 46 "Executed stages on incomplete works", if your organization takes into account the costs of the individual phases of work performed.
6
Make accounting entry posting when payment by the customer of each completed stage of the work: Debit 46 Credit of account 90 "Sales". After the object is complete the wiring to write off WIP: the Debit of account 62 "Settlements with buyers and customers", Credit of account 46 "Executed stages on incomplete works".

# Advice 3: How to calculate overall profitability

In the process of activity of the enterprise must not only maintain records of business transactions, but also to carry out economic analysis of the final results. The analysis uses a different methodology, calculated economic indicators and, in particular, is determined by the overall profitability. This index characterizes the economic efficiency of the company during the reporting period.
You will need
• - the balance sheet of the company for the analyzed period(form No. 1 of financial statements);
• - report on profit and loss for the same period(form №2 of financial statements).
Instruction
1
Determine the gross profit of the company for the analyzed period. The value of the amount of gross profit you take from the form №2 "Report about profits and losses"(line 29) financial statements.
2
Determine the average value of fixed assets as follows. In the balance sheet take values in line 120 "fixed assets" at the beginning and at the end of the period. Add up these two numbers. Divide the sum by 2.
3
Calculate the average value of current assets. They include inventories, work in progress and deferred expenses. Fold the data at the beginning and at the end of the period on the line 210 "Reserves" of the balance sheet. Divide the sum by 2.
4
Use the formula to calculate the total profitability robs=Pval/(Posn+Pobor)X100%, where:
- Pval - gross profit for the analyzed period,thousand RUB.;
- Fon - the average value of fixed assets in the analyzed period,thousand RUB.;
- Faber - average cost of current assets for the analyzed period,thousand RUB
5
Calculate the total return in the above equation, dividing the amount of gross profit to the amount of the average cost of fixed and current assets. Multiplying the resulting ratio by 100 to get the value of total profitability of the enterprises in per cent.
Note
Overall profitability characterizes the amount of profit that falls on each ruble spent fixed and current assets. The higher the ratio, the more effective use of production funds of an enterprise.
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