The raw material which is purchase is been used to manufacture two finished products. Both the products require same material with only one raw material with lesser quantity and amount. How to value both the products at the end of the Year? Is the raw material purchased has to be bifurcated between two products at GRN level and maintain separately as stock OR can be taken into stock as it is and then issue as per requirement?
Please Suggest.
Guidance on Valuing Finished Products: Use Lower of Cost or NRV; No Bifurcation Needed Unless NRV is Lower. A query was raised regarding the valuation of goods, specifically how to value two finished products made from the same raw material at the end of the year. The question was whether the raw material should be bifurcated between the two products at the goods receipt note (GRN) level or kept as a single stock and issued as needed. The response advised that inventory should be valued at the lower of cost or net realizable value (NRV), and there is no need to bifurcate the raw material unless the final products are expected to have an NRV lower than the cost. (AI Summary)
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