Goods In Process

An inventory account that is usually identified on the balance sheets of manufacturing companies. Goods in process relates to the partially completed goods that are somewhere in the manufacturing process and are not ready for sale. It is calculated as:



Also known as "work in process".

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Goods in process is one of three manufacturing inventory classifications. It is found in between raw materials and finished goods. Goods in process differs from raw materials because it also includes some labor and overhead.

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Manufacturing: inventory at a stage between raw materials and finished goods. Work-in-process must be accounted for when valuing inventory for accounting purposes.

Fulfillment: cash orders received and cashiered (see cashier) but not entered to the fulfillment system at the time reports are generated. Work-in-process creates an imbalance between cash-deposit reports and order-volume (production) reports.

Work or task currently being processed; also called work in progress. The task is currently being performed. A work in process sign usually is notice to stay away until the job is done.

Partially completed inventory units at the end of the accounting period; for example, a table without legs also called goods-in-process. In Absorption Costing, work-in-process is valued at the total cost to process it, including direct material, direct labor, and factory overhead (fixed and variable). In Direct Costing, work-in-process is valued at only the variable costs to produce it, consisting of direct material, direct labor, and variable overhead. Ending work-in-process is shown as a current asset in the balance sheet. Beginning and ending work-in-process units are shown in the cost of goods manufactured schedule of the income statement.