Work in Process Inventory
When a material is entered into production, it is no longer considered a raw material and is instead transferred to the account titled Work in Process inventory (WIP).
About WIP
- Inventory of goods that are in production but not completed
- Cost of WIP is the sum of direct materials used, direct labor and manufacturing overhead
- When goods are completed, they exit WIP, this is called Cost of Goods Manufactured (COGM)
Example: Work in Process Inventory
What is the total cost of goods manufactured for the month of January, use the following information:
- Direct materials purchased: $60,000
- Direct materials, January 1: $30,000
- Direct materials, January 31: $24,000
- Direct labor used: $80,000
- Manufacturing overhead used: $45,000
- Work in process, January 1: $110,000
- Work in process, January 31: $80,000
The Cost of Goods Manufactured Schedule
Example: Cost of Goods Manufactured Schedule
Prepare the cost of goods manufactured schedule using the following information:
- Direct materials purchased: $60,000
- Direct materials, January 1: $30,000
- Direct materials, January 31: $24,000
- Direct labor used: $80,000
- Indirect labor: $12,000
- Indirect materials: $24,000
- Factory depreciation: $15,000
- Work in process, January 1: $110,000
- Work in process, January 31: $80,000