Enter the beginning work in process inventory, manufacturing costs, and ending work in process inventory into the calculator to determine the total work in process inventory value.
Work In Process Inventory Formula
The following formula is used to calculate the work in process inventory:
WIP = B + M - E
Variables:
- WIP is the work in process inventory value ($)
- B is the beginning work in process inventory value ($)
- M is the total manufacturing costs ($)
- E is the ending work in process inventory value ($)
To calculate the work in process inventory, add the beginning WIP inventory value to the total manufacturing costs, then subtract the ending WIP inventory value.
What is Work In Process Inventory?
Work in process (WIP) inventory refers to the materials and goods that are in the production process but are not yet completed products. It is a crucial component of inventory management and accounting, as it represents the value of the investment in the production process. Accurate calculation of WIP is essential for understanding the efficiency of production, managing cash flow, and preparing financial statements.
How to Calculate Work In Process Inventory?
The following steps outline how to calculate the Work In Process Inventory:
- First, determine the beginning work in process inventory value (B).
- Next, determine the total manufacturing costs (M) incurred during the period.
- Next, determine the ending work in process inventory value (E).
- Use the formula WIP = B + M – E to calculate the work in process inventory value.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Beginning work in process inventory value (B) = $5,000
Total manufacturing costs (M) = $2,000
Ending work in process inventory value (E) = $1,500
