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WHILE COMPUTING INVESTMENT IN CURRENT ASSETS OF WIP WHY WE TOOK RM FOR 100% AND DIRECT WAGES AND OVERHEAD FOR ONLY 50%?? SIR Video Details ------------- Financial Management Working Capital Management #19. Illustration 6 - Part 1
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Question states "Each unit is expected to be in process for one month, the raw materials being fed into the pipeline immediately and the labour and overhead costs accruing evenly during the month." in WIP, the raw material portion is incurred on day 1 so full cost of RM has to be considered. But The work on raw material that has gone into WIP in terms of people working on it and the process will accrue equally through the month . so on an average the cost of OH & Direct Wages will be 50% of what is usually incurred for a full month
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