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Input data

"Egg", "Flour" and "Sausages" are goods and their total cost is calculated by the MWAC method. "Bread" (semi-finished product) and "Sandwich" (dish) are purchased ready-made according to invoices, however, they can be prepared on site. "Sandwich" is always written off as a ready dish (the cost will be equal to COST), changes in the cost of "Bread" when changing the write-off method from storage are considered in later examples.
NameMeasurement unitEstimated costAccounting Group
Eggpcs3product
Flourkg10product
Sausageskg200
Sandwich
Bread1
Sausages1
product
Breadpcs14semi-finished product
Sandwichpcs14item

Receipts Data

Invoice 1 (20.05.2008 10:00)

NameMeasurement unitPrice (€)Quantity
Breadpcs1210
Sausageskg2405
Sandwichpcs1250

Invoice 2 (21.05.2008 10:00)

NameMeasurement unitPrice (€)Quantity
Breadpcs135
Eggpcs320
Eggpcs410
Sausageskg2505

Example 1. Write-off by Ingredients

NameDeliveryMWACLIFOCCOSTLIFOCRPCost
PriceQty
Egg3203.3333.333  3.333
410(3×20 + 4×10)/ (20 + 10)
FlourNo receipts10*-  10*
Sausages2405245250  245
2505(240×5 + 250×5)/ (5 + 5)
Bread121012.3331313.333*13.333*13.333*
135(12×10 + 13×5)/ (10 + 5)1×3.333 + 1×101×3.333 + 1×10
Sandwich1250121213.583*13.833*13.583*
0.1×(1×3.333 + 1×10) + 0.05×2450.1×(1×3.333 + 1×10) + 0.05×250
  1. "Egg" has two receipts on the same invoice and so its LIFOC is calculated as a weighted average value. "Sausages" has receipts registered on different invoices, so its LIFOC is taken from the second invoice.
  2. There were no receipts of "Flour", so its Estimated Cost is used in calculations. The cost values where an estimated value is used are marked with an asterisk (*).
  3. "Egg", "Flour" and "Sausages" are goods and their total cost is MWAC.
  4. "Egg", "Flour" and "Sausages" are written off by ingredients, which is why their total cost is COST.
  5. Since "Sandwich" includes ingredients ("Bread" also has a recipe) which are also written off by ingredients, the COST for "Bread" is used.

Example 2. Write-off by ready-to-eat item/semi-finished product

NameDeliveryMWACLIFOCCOSTLIFOCRPCost
PriceQty
Egg3203.3333.333  3.333
410(3×20 + 4×10)/ (20 + 10)
FlourNo receipts10*-  10*
Sausages2405245250  245
2505(240×5 + 250×5)/ (5 + 5)
Bread121012.3331313.333*13.333*12.333
135(12×10 + 13×5)/ (10 + 5)1×3.333 + 1×101×3.333 + 1×10
Sandwich1250121213.48313.813.483
0.1×12.333 + 0.05×2450.1×13 + 0.05×250

The differences in calculating cost are as follows:

  1. Total cost of bread is MWAC. This value is used when calculating the COST for "Sandwich".
  2. As the write-off method for "Sandwich" has not been changed, its total cost is equal to COST.