CA. Heet Shah (Tax Consultant & Practitioner) (6174 Points)
19 June 2021How to compute valuation of stock in case of goods sent to job worker in case of jewels?
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 19 June 2021
Many people follow job costing
Predetermined overhead rate = Estimated Overhead / Estimated Activity
this needs estimated overheads and I don’t understand why many make err like this. They can do computations one day trial cost basis to get accurate measure of oneday estimated overheads.
Next, try Relevant cost pricing strategy because this will help you accurately cost of gold sold as it includes the price fluctuations of gold in stack and any new gold you will purchase. This can also be used to calculate revised gold cost as gold rates change everyday.
Note that this is similar to marginal costing which ignores fixed over heads. So, once you finish the above add fixed overheads plus a markup to derive your profit.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 19 June 2021
I have attached a sample problem. The costs when you compute them on a cost plus pricing basis does not cover the whole opportunity costs lost.
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