What Is a Work-in-Progress (WIP)?

WIP (work-in-progress) is a manufacturing and supply-chain management phrase that refers to partially finished items that are waiting to be finished. Raw materials, labor, and overhead expenditures for goods at various phases of the manufacturing process are referred to as WIP. On the balance sheet, WIP is a component of the inventory asset account. These expenses are then moved to the completed products account, and then to the cost of sales account.
On a company’s balance sheet, WIPs are one of the items. The WIP figure solely represents the value of items in various stages of production. This does not include the value of raw materials that have not yet been integrated into a product for sale. The value of finished items retained as inventory in expectation of future sales is not included in the WIP number.