(81)---How important is credit card debt management?

After what the economy has been reeling under, how can one undermine the importance of credit card debt management? It can also be said the other way round. How important is money management whether you use plastic money or cash. A credit card is money in disguise!

Of late there has been a lot of hue and cry about effective credit card management skills and managing credit card debts. It has been observed on several instances that even if you have mastered the art of money management, you may encounter unforeseen events that can sweep you off the ground. How you rise up to such a situation and how well you are equipped to counteract the financial crisis essentially reflects your money management skills.

Credit cards can be your foe or friend depending on how you use them. It is very important to keep in mind that whatever you do with your finances gets recorded in your credit report. And there is a close association with your credit score and your financial well being. Your credit score also indicates how financially responsible you are.

Given below are few measures that you can adopt to remain financially in good health

• When you use credit cards, you are using someone else' money, so how can you misuse cash that doesn't belong to you. But that is what most of the consumers do. Use credit cards only if you are in dire need of cash. Just because you have been allowed to use credit doesn't necessarily mean that you have to exploit it.


• After fulfilling your financial obligations each month, make sure you keep aside some cash for building an emergency fund. You will realize the importance of an emergency fund only if you face financial hardship.


• Avoid taking fresh credit unless you are done with your existing credit card debts. When you are making payments for your monthly financial obligations, make sure you don't strain your purse. Maintain the comfort level in making payments. In other words, live within your means.


• As far as investment is concerned, choose an investment vehicle that will give you good returns. This may not be possible if you are a beginner. But you can always take help of a stock/forex broker to get best returns.


• Keep aside money for your retirement.

You will manage your finances well only if you are aware of the consequences of money mismanagement and what it can lead to.

(80)---TREATMENTS FOR WORKING PROGRESS IN PROCESS COSTING

Opening and closing working progress

If opening or closing stocks of work in progress exist; the calculations of the cost per unit required some additional computations. It is obvious that partly completed production working progress will have a lower unit cost than fully completed production.
Consequently, when opening and closing stocks of work –in-progress exist unit costs cannot be computed by simply dividing the total cost by the number of units still in the process. For example, if 8,000 units were started a completed during period and another 2,000 units were partly completed, than then these two items cannot be added together to ascertain the unit cost. We must convert the work in progress into finished equivalents also referred to as equivalent production so that the unit cost can be obtained.

Elements of costs with different degrees of completion

A complication which may arise concerning equivalent units is that in any given stock of work in work in process into all of the elements which make up the total cost may have reached the same degree of completion. For example, materials may be added at the start of the process and are thus fully complete, whereas labor and manufacturing overheads may be added throughout the process. Materials may be 100% complete, while labor and overheads may only be partially complete. Where the situation arises separate equivalent production calculation must of each element of cost.

Previous process cost

As production moves through processing, the outputs of one process become the input of the next process. The next process will carry out additional conversion work and may add this achieved by labeling the transferred cost form the previous process ‘previous process cost’ and treating this item as a separate element of cost. Note that this element of cost will always be fully complete as far as closing work in progress in concerned.

Opening Working progress

When opening stocks of working progress exist an assumption must be made regarding the allocation of this opening stock to the current accounting period to determine the unit cost for the period. Two alternative assumptions are possible.

First one may assume the opening work-in progress is inextricably merged with the units introduced in the current period and can no longer be identifies separately the weighted average method.

Second one may assume that the opening work in progress is the first group of units to be processed and completed during the current month the first in first out method.