Write-off of materials in production.

The basis for the proper conduct of business operations is the primary documents. They, in turn, form the accounting of income and expenditure, the composition of costs for both production, basic or auxiliary, and for management purposes.

Write-off of materials in production should occur in accordance with the Law, the PBU and the Methodological Guidelines of the Ministry of Finance of the Russian Federation.

Inventory costs can be written off:

• Calculating the cost of each individual unit of the product.
• Calculation of the average cost price.
• By the FIFO method (when the cost of goods purchased in the first reporting period is taken into account).
• By the method of LIFO (when the calculation is made at the cost of goods purchased in recent years).

Methods for writing off materials in production are carried out in different ways and depend on which group of records materials and components belong to, and what accounting policies the company adheres to.

Write-offs for each unit (at cost)

Accounting for the release of materials into production at cost and taking into account each unit of the nomenclature is convenient when in a small organization the list of goods is not too extensive and lots of goods are small, and the path of each lot is easily traced, and the prices of goods are stable throughout the implementation period. In this case, the cancellation can occur at the same prices at which they are accepted. There are two ways in which materials can be written off to production:

• The cost includes all costs that went to purchase the goods.
• The method is simplified when the value is accounted for at the price of the contract, and all other costs are written off, based on the proportionality of the write-off amount of the production materials (also at contract prices). This method is used in the case when the amount of transportation and procurement costs is difficult to identify.

Write-off of materials in production at cost, calculated on average

For each type of goods, the amount is determined, which consists of the balance at the beginning of the month, plus all receipts during the month (total cost price) and is divided by the amount of materials (balance plus receipt). Thus, by identifying the average cost of goods, multiply it by the amount corresponding to the period of write-off. The average cost price will change as soon as the goods move.

The first option is called a weighted estimate, the second is called a sliding one. The choice depends on the goal pursued by the method. When the data is prepared for a report for any period, a weighted estimate is needed, and when the materials are written off to production, then they use a rolling estimate of the cost price.

FIFO Method

Despite the fact that the FIFO method is also used in two versions, the balance in the stock of raw materials and (or) materials remains unchanged. Then it is difficult to distribute the cost of goods taken for purchase and released into production in accordance with a certain lot with a large list of items, especially if the receipt of goods or raw materials occurs frequently.

This method is fixed in the accounting department by the order of the head and is used at the enterprise for at least a year, in accordance with the Accounting Regulation (paragraph 21), since, depending on the price movement in the market, the difference between the purchase price and the initial accounting price will accordingly reduce or increase the profit .

The LIFO method

The reverse method is the write-off of materials in the production of the category that came in recently, and only then - those goods that came before.

• Take as a basis for writing off the cost of the raw materials that were purchased first in time, then (sequentially) there is a second batch, and so on.
• Then they write off at the price of the last purchased lot. The total of the reporting period (month) is determined by the usual summation of the balance and arrival for the month, based on the price of the first purchase of materials.

Whatever the methods of writing-off materials in production, no matter how the materials and raw materials are released from the warehouse, the movement of goods should be registered, always based on the primary documents unified and drawn up in accordance with Article 9, point 2, Law No. 129 FZ .