Читать книгу Cost Accounting For Dummies - Kenneth W. Boyd - Страница 41

Manufacturers make products. They incur material and labor costs, as well as overhead.

No manufacturer can produce a product instantly. When you close the factory doors for the night, you have partially completed goods on hand. Those products are called work-in-process (WIP).

Assume you make blue jeans. The jean production moves from one department to another. Say that the denim material has been cut for 100 pairs of jeans. The next step is to sew the denim and then dye the material. You close your factory doors before the jeans move to the sewing department.

Consider the cost you’ve incurred on the jeans. You purchased the denim, a material cost. You paid your workers to run machines to cut the denim (labor costs). So the work-in-process jeans have incurred some costs, but not all the costs required.

When work-in-process goods are completed, they are defined as finished goods. Finished goods are ready for sale to a customer. They incurred all manufacturing costs.