Work in Progress Calculator

What is work in progress?

Work in progress (WIP), also written work in process, is the value of products that have entered production but are not yet complete at the end of a period. It carries the materials already used plus the labour and overhead applied so far.

Formulas

• Manufacturing costs = direct materials + direct labour + manufacturing overhead
• Ending WIP = beginning WIP + manufacturing costs − cost of goods manufactured

Worked example

Materials of 60,000.00, labour of 45,000.00 and overhead of 30,000.00 add 135,000.00 of manufacturing cost to a beginning WIP of 15,000.00. After 130,000.00 of goods were completed, ending WIP is 20,000.00.

How to use the work in progress calculator

1. Enter your figures: beginning WIP inventory, direct materials used, direct labour, manufacturing overhead and cost of goods manufactured.
2. Read the result. It updates as you type, so there is no button to press.
3. Try other numbers to compare scenarios. Reset brings back the example values.

Getting it right

• Only materials actually issued to production count, not everything bought in the period.
• High WIP ties up cash and floor space; it often points to a bottleneck at one stage of production.
• Count WIP at the same point each period so the figures are comparable.

Frequently asked questions

How do you calculate work in progress?

Add the period’s direct materials, direct labour and manufacturing overhead to beginning WIP, then subtract the cost of goods manufactured.

Is WIP an asset?

Yes. Work in progress is a current asset on the balance sheet, listed with raw materials and finished goods under inventory.

Is it work in progress or work in process?

Both are used for the same thing. “Work in process” is more common in US manufacturing accounting, “work in progress” elsewhere and for long projects.