Re: Accounting Entries from Production to Finished Stock

Hi,

Thanks for clarifying on Routing & Overheads. I will look into product costing in details. However this brings up further two question.

1. Production of Goods– If Semi Finished Goods Stock A/c is debited, at some point this should be reversed against Finished Goods A/c.Otherwise we will end up in Stock of Semi-Finished Goods which are actually finished and should be “Finished Goods”
2. Secondly, there should be an entry in FI to show Cost during Routing & Overhead allocation. Else the only cost Semi-Finished Goods Inventory & Finished Goods Inventory will carry is Material Cost which I believe is not correct.

          Semi-Finished Goods or Finished Goods Inventory = Material Cost + Production Overhead + Sales & Distribution Overheads (which I can't see happening in FI if Routing & Overheads are allocated in CO & not FI)

If Overhead allocation and routing allocation is happening in CO & not FI, there will be mismatch in Semi-Finished Goods or Finished Goods Inventory as per FI & CO

Will look forward to further help and advice!