Work in Progress refers to the value of all production orders that have been started but not yet completed – that is, products that are in the process of being manufactured and are not shown as raw materials or finished goods on the balance sheet.
In SAP Business One, Work-in-Process arises during the production process. As soon as components are withdrawn from inventory via material issue and charged to the production order, but no completion posting has yet been made, the corresponding value is accounted for as Work-in-Process. The system sums up the material costs of the withdrawn components and resource costs (labour time, machinery). Only with the completion posting – the goods receipt from production – is the value activated as finished goods and the cost price of the produced item is finally calculated (actual cost calculation, table OINM). From an accounting perspective: Work-in-process is to be valued at manufacturing costs; if the projected total costs exceed the revenue, a foreseeable loss arises, which must be taken into account according to the principle of prudent valuation.
Demarcation
Work-in-Process is not an independent document or stock type in SAP Business One, but rather an interim accounting status within the production cycle. Completed production orders transfer the Work-in-Process value entirely to finished goods stock.
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