Work in progress is the cost of products that are at different stages of the production cycle: from launching into production to the release of finished products and their inclusion in the product release. In other words, these are partially finished products that have not gone through the full production cycle provided for by the technology.
Instructions
Step 1
You can define work in progress by looking at it from multiple perspectives. In terms of technology, work in progress is the value that is being processed. As a rule, these are materials that are owned by the enterprise and are written off to the shop from the warehouse. It is assumed that all materials in the workshop must be processed into finished products and sent to the warehouse.
Step 2
From a legal point of view, work-in-progress is values that are materially responsible for the administration of workshops. This definition of work-in-progress is broader than the previous one, since it includes materials that are accepted into the workshop, but not yet included in processing, as well as finished products that have been processed, but have not yet arrived at the warehouse.
Step 3
Remember that from an economic point of view, work-in-progress is capital that is invested in working capital, and which must turn into money, becoming a finished product. The speed of this transformation depends on production technology and market conditions.
Step 4
From the point of view of accounting, you can see the work in progress on account 20 "Main production". The costs for it are reflected in the debit of this account. At the same time, with those industries where there is no work in progress, for example, in the energy sector, the turnover of this account is the actual cost of production. But in most industries where work in progress takes place, the actual cost does not coincide with the costs accounted for in account 20.
Step 5
You can calculate WIP in two steps. First, find natural residues of valuables in production at the end of the month. Then estimate the indicated balances in monetary terms. This work is rather laborious. In kind balances at the enterprise are determined on the basis of inventory data, and the cost estimate of work in progress is calculated by the accounting staff.
