In process costing we attempt to estimate how much of a batch of products can be
ID: 2448197 • Letter: I
Question
In process costing we attempt to estimate how much of a batch of products can be considered finished or complete, even when none of the products are actually finished or complete. Is it logical to report that something is finished, when in fact it is not? Would it make more sense to keep everything as unfinished, until that very moment when the product is ready to sell?
In process costing we attempt to estimate how much of a batch of products can be considered finished or complete, even when none of the products are actually finished or complete. Is it logical to report that something is finished, when in fact it is not? Would it make more sense to keep everything as unfinished, until that very moment when the product is ready to sell?
Explanation / Answer
No, it is not at all logical to report something which is actually not done, if production is not finished or products are not finished then they should not be reported as finished. Because it will create indiscipline and mismanagement, if management will take order on the basis of false report, and then production departmentr would not be able to provide meet the demand on time, then it will question the reputation of the company, So report what is actuallly been done or exact position of production.
No, its better to keep the goods ready because it will reduce workload and rush for the last moment and even sometimes company receives emergency orders whcih requires to be fulfilled immediately in those cases we need complete finished goods so that goods can be sold immedaitely without any delay, as it also profits more to thcompany becasue in emergency cases orders been charged more.So better to keep the goods ready instead of waiting for the last moment.