What is work in process?
What is work in process?
work in process, or WIP, is work in process and is part of the inventory account used to represent assets on the balance sheet. But sometimes it is called work in progress. Problems in production make work in process different from other types of inventory. This is because while other types of inventory are available for sale, WIP is not ready for sale. Still in the form that has not changed in accounting should be divided into 4 parts as follows.
- Raw material is the value of the raw material acquired.
- Work in progress is the value of raw materials, labor costs, including other expenses. that occur during production
- Semi-finished products are products that the company has produced by itself and is waiting for further production because it is not perfect.
- Finished goods are goods that the company has finished production and is ready to be sold.
work-in-process problems
- Storage When the production rate of the process is not balanced Therefore, WIP storage is required, but as more SKUs are added, it will result in wasteful management of storage space.
- prioritize Many times one WIP process is not immediately forwarded to the next. As a result, work ordering requires space for storage.
- Timely delivery Time wasted due to the difficulty of management with the old WIP (Manual).
- Labor costs, increasing number of SKUs It will increase the burden on employees who need to WIP, thus directly affecting the increased production costs.
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