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production operation value on inventorypor
I would like to know how to add the production operation cost on inventory value.
Product P1 consists of Raw materials R1 + R2 and Operation O1
R1 cost = 1
R2 cost= 1
O1 cost per P1 unit = 1
in this case the system will credit raw inventory by 2 & dr. WIP inventory by 2 -- this is ok
then it will cr. WIP inventory by 3 adding O1 cost and dr. final product inventory by 3 leaving WIP inventory account with minus ( in this case -1 ) balance .
So what's the best way to process this operation cost on inventory value ?