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Process Costing

Sami Abulehya's Profile

Process Costing

How can I determine the percent complete in respect to materials, labor, and overhead

Answers

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

I am not sure of your question. I assume you have a standard that is made up of materials/labor/overhead. How you perform against that standard will tell you if you are over/under spending on these components. If you do not have standards, you will need some sort of estimate to determine percent complete.

If your question is more on project costing, when I was subject to SOP 81-1 (you can search for the ASC), total costs were used for my percent complete percentage.

Sami Abulehya
Title: Chief Accountant
Company: Laf
(Chief Accountant, Laf) |

A percentage of completion is required In order to convert partially completed units into equivalent units, how this percentage is measured ?

Topic Expert
Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

People use various methods in practice. Often a rough estimate is used for the first 50% or so of the project (assume the budget was correct - and measure spend/use against the budget) - with some confirmation from the project manager that no major changes have occurred.

The value is an estimate no matter what you do. You can ask the PM for a percent complete for your variables - or you can ask them for an estimate to complete (ETC). The estimate to complete has the advantage of removing the total project delivery judgment and focusing on what remains to be done for success.

Of course the size and risk associated with the project should be factored into any system you use.

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