How to identify work in progress
Video: How do you identify work in progress? 2024, June
Work in progress is the cost of products that are at different stages of the production cycle: from launching into production to manufacturing finished products and including them in the product mix. In other words, this is a partially finished product that has not passed the full production cycle stipulated by the technology.
Instruction manual
1
You can identify work in progress by looking at it in several ways. In terms of technology, work in progress represents the values that are being processed. As a rule, these are materials that are owned by the enterprise and are written off to the workshop from the warehouse. It is assumed that all materials in the workshop should be processed into finished products and sent to the warehouse.
2
From a legal point of view, work in progress is the values that are the responsibility of the administration of the workshops. This definition of work in progress is wider than the previous one, since it includes materials that have been accepted into the workshop but not yet included in processing, as well as finished products processed but not yet delivered to the warehouse.
3
Remember that from an economic point of view, work in progress is capital that is invested in working capital, and which should turn into money, becoming finished products. The speed of such a transformation depends on production technology and market conditions.
4
From the point of view of accounting, you can see the work in progress on account 20 "Main production". Costs are recognized in the debit of this account. Moreover, from those industries where there is no work in progress, for example, in the energy sector, the turnover of this account represents the actual cost of output. But in most industries where work in progress takes place, the actual cost does not coincide with the costs recorded in the 20 account.
5
You can calculate the value of work in progress in two steps. First, find the natural balances of values in production at the end of the month. Then evaluate the indicated balances in monetary terms. This work is quite laborious. In-kind balances at the enterprise are determined on the basis of inventory data, and the valuation of work in progress is calculated by accounting personnel.
