Work in Progress Inventory Formula
Calculating WIP inventory may differ with the specific context, yet, for the most part, such costs are attributed to partially manufactured goods or projects where the expenditure has occurred.
WIP Inventory = Cost of Materials + Direct Labor Cost + Manufacturing Overhead
Where:
- Cost of Materials: The cost of raw materials used in the production process.
- Direct Labor Cost: The cost of labor directly involved in the production process.
- Manufacturing Overhead: The indirect costs associated with production, such as utilities, depreciation, and facility maintenance.
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