Average costing for RM & FG (Negative balance in WIP)

thinafans

Dear Friends,
Just assume that I created the NewDB with fresh Opening and define the Average cost in Each Item card.
my RM average cost is = 100
My FG average cost is = 130 ( Including my Overhead cost and indirect cost)

Step: 1 ( Consumption)
RM Imventory A/C (Cr) = -100
WIP A/C (Dr) = +100

Step:2 ( Output)
WIP A/C (Cr) = -130
FG (Dr) = +130

Final My G/L balance is

1. RM Inventory A/C =0
2. WIP A/C = -30
3.FG A/C = 130

As per Accounts standard is this right ?

Can you pls suggest me.

Thanks in advance,

THINA

AlexWiley

I don't have time to look this up or test, but doesn't the WIP difference go to direct cost applied account for the finished good? If you are testing this and things don't look exactly right make sure you run adjust cost.

thinafans

Dear Alex,
Thanks for your response.
I found out the problem. The Overhead cost is posting to FG A/C so that the WIP A/C balance will not be in Negative.

Regards,

THINA