WIP, COGS, AND ALLOCATION

摘要

We've noticed a heightened interest lately in work in process (WIP) inventory. Reader J.D. asks ''Is there an official formula for measuring WIP inventory turns? Is WIP cost of goods sold (COGS) for a given period of time (month, week), divided by WIP average inventory (same time period), the measurement for inventory turns?" He also asks, "What constitutes WIP COGS?" William E. Maginn describes WIP as a "crucial window to the shop floor" and uses the bathtub analogy: The spigot represents input, the drain is output, and the water level equals WIP. He uses the formula, E = B+I-O, where E equals ending WIP level, B is the beginning WIP level, I is input, and O is the output.