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WIP Reversal with and without Cut Off Perio

Oct 17, 2016 at 07:08 AM

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Hi,

Given the WIP cost for 3 months is as follows :-

Period 1 = $5

Period 2 = $3

Period 3 = $2

If i use the previous period as the cut off period month to month the WIP will be computed as follows :-

Period 1 = $5

Period 2 = $3

Period 3 = $2

However, if i do not use the cut off period, will the WIP be calculated cumulatively as follows? :-

Period 1 = $5

Period 2 = $8 (Will period 1 WIP be reversed?)

Period 3 = $10 (Will period 1 & 2 WIP be reversed?)

If yes then will the system also do a WIP reversal month to month if i do not use the cut off period because otherwise the WIP costs of the previous period will not be reversed?

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