Work-in-Process (WIP)

Work-in-Process (WIP) refers to items that are in various stages of production but are not yet finished goods. It includes raw materials that have begun the manufacturing process, labor costs incurred, and overhead expenses related to production. WIP is important because it helps businesses track the costs and efficiency of their operations, ensuring that resources are effectively utilized. Proper management of WIP can lead to better organization, reduced waste, and improved cash flow within a company. It plays a crucial role in production planning and inventory management.