USA WIP (Work in Process/Progrees) Calculation


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I was hoping you could assist me with a work related issue that I am trying to resolve. We have a WIP schedule in our monthly financials for tracking our construction jobs in progress. The formula I am familiar with is

WIP = (Actual Cost/Budget Cost) * Contract Value – Billed Revenue

My predecessor used a different method of calculating WIP and I cannot find anything online, or otherwise, to back up her computation. She used:

Cost to date + Realized Profit to date – Billed Revenue to date

I took over the accounting manager position recently and I am trying to understand the prior method of calculating WIP. If both methods produced the same number we wouldn’t have an issue. But I cannot stand behind her formulas.

My predecessor purposely did not reveal her methodology on a number of subjects, to ensure she was not "replaceable". It has made my new job tedious and stressful. If I could solve this one final issue, I believe I will have everything under control. Our CPA is not helpful at all. That’s a whole other issue in itself.
 
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kirby

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You know and can support your formula so just use it and don’t look back. I’ve experienced many times from a predecessor the “this is my unique and personal method - never change it”. And I’ve found that this is the modern equivalent of “if you change anything the gods will be angered!” Trust your knowledge and experience over unsupported fabrications.
 
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