The closing work-in-progress of a period becomes the opening work-in-progress in the next period.
There is no need to prepare the Statement of Equivalent Production when closing stock is not existed.
Opening work in progress would be an additional input that enters into the production process apart from the other inputs that might be received from the previous process or entered directly in the current process.
More clear with practical example,
Example:
Consider the following cost data of an organisation relating to a process for the month of April 2008.
1,600 units were in process at the beginning valued at Rs. 80,000 made up of Rs. 40,000 of material cost, Rs. 24,000 of labor cost and Rs. 21,000 of overhead expenditure.
These units were
70% complete with regard to Direct Materials,
50% complete with respect to Labor and
70% complete with regard to Overhead Expenses;
- 5,000 units of material were introduced into the process at a total cost of Rs. 2,20,000.
- Direct Wages incurred for the process - Rs. 1,85,000
- Overhead Expenditure - Rs. 92,000
There was no work-in-progress or any other stocks at the end of the period. There were no losses in processing.Also consider there is no loss.
Solution:
Dr Process A/C Cr
Particulars Quantity Amount Particular Quantity Amount
(in Units) Rs. (in Units) Rs.
To Balance b/d 16,00 80,000 By Finished Production 6,600 577,000
To Direct Materials 5,000 2,20,000
To Labor 185,000
To Overheads 92,000
Total 6,600 577,000 6,600 577,000
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