In accounting the term work in process means the goods that are under the process of completion but are not completed yet. The work in process goods are somewhere in between the raw materials and finished goods of the inventory. In terms of classification of work in process the inventory is filled with the raw materials that are required to manufacture that product. During the production the cost of overhead and the cost of labor involve in production is also included in the total production cost of work in process goods.
In we see the work in process goods in terms of value we will be find out that work in process goods are more valuable than the raw materials as processing costs have been added in the total production costs. But the work in process goods are not valuable than the finished goods as the entire process and production costs are not yet assembled in the work in process goods.
There are a number of steps involve in work in process accounting that are explained as under:-
Assigning Raw Materials
In this step all the raw materials are assigned to the work in process as soon as the production of the goods starts.
Compiling Labor Costs
This is done by tracking the time required to complete a product hence it will assigned to the work in process to find out the total percentage of the labor costs complied for that time required for production.
In this step the overheads is calculated on the biases of the labor hours consumed in the production of the goods.
Recording the Entries
This step involves recording the activities such as shifting the raw materials from the ware house to the production site, shifting labor hours costs in to production costs etc.
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