See: Work-in-process Inventory.
Work in progress is used today in many, more "casual" contexts, but the OG use of the term is from the supply-chain management sector. Work in progress is used to describe goods that are partially made, but not yet complete. If these partially made goods had their own smartphones with Facebook on them, “work in progress” would be their status.
Their relationship status with the factory? “Complicated,” predictably, since they’re glad they are being made, but are aware they’re not done yet, so….that’s awkward. Work in progress, or WIP costs, are put on the balance sheet at each stage to help determine overall costs that went into making said goods. Each stage that goes into making the goods has its own WIP costs, which are all added up to get the total cost of the final good. This includes the obvious (raw materials and labor) as well as the not-as-obvious (don’t forget overhead costs).
Related or Semi-related Video
Finance: What is work-in-process invento...3 Views
finance- a la shmoop. what is work-in-process inventory? your company
junk in the trunk makes enema kits for Elephants . what they get stopped up too. [tower with "junk in the trunk" written on it]
just need you know big bags. anyway so you've extruded ten thousand bags. you
need ten thousand giant hooks to hang the bags on palm trees and ten thousand
tube thingies for the you know de new mall. they cost you a total of 60 grand
to produce and are not yet packaged. the product isn't finished.
in fact the rubber hosing and so on has to be made of a special material that
takes three months to fully dry. you know that African climate is hell on rubber.
you also have four tons of rubber in blocks sitting around the factory floor [ants crawl across the floor]
with ants singing to it. and you have a mile of wire you'll eventually Bend into
bag hanging hooks it's just sitting in a coil.
alright you paid for the rubber blocks, and the wire already it's just sitting
there so these elements of product are in process. the product isn't finished
completed or ready to ship. so work in process inventory really just consists
of raw materials at various stages of production. and you know generally work
in processes just sitting on the factory floor versus out the door when it then
becomes a finished goods. and just remember that concept for you next time
you're unpacking a pachyderm. [woman in white coat peeks out from behind an elephant]
Up Next
What is Work in Process from a Cost Account Perspective? Work in Process is an accounting strategy that’s used to account for only the amount of...