This document discusses work in progress (WIP) for a company's finance department. It defines WIP as materials and products that are in the process of being produced but are not yet finished goods. The document outlines how WIP is valued at different stages of completion based on raw materials, labor costs, and overhead. It also discusses how reducing cycle times can lower the amount of WIP being held. Finally, it provides a simple process map example and discusses production techniques like pull-kanban that can optimize costs by minimizing WIP levels over time.

1. xxxx Group
Finance Dep staff presentation
2015.6.24

2. Work in Progress
Understand Stage Of Completion
Measurability (Quantifiable)
Understand the value addition of
each cost element at each stage of
completion
UNDERSTAND COST ELEMENTS

3. Cycle time

4. Relation of
WIP Vs Cycle time
Short the Cycle time  Lower the WIP
Longer the Cycle  Higher the WIP

6. Location which Creates the WIP
RM
Factory
Finish Goods
Stores WIP

7. What is WIP
• WIP stands for Work In Progress
• DEFINITION of 'Work In Progress - WIP'
Material that has entered the production process but is not
yet a finished product.
Work in progress (WIP) therefore refers to all materials and
partly finished products that are at various stages of the
production process.
WIP excludes inventory of raw materials at the start of the
production cycle and finished products inventory at the end
of the production cycle.
Read more: http://www.investopedia.com/terms/w/workinprogress.asp#ixzz3dxra5T7p

9. Simple Process Map

10. Production Process
Work Center 1 Work Center 3Work Center 2
Op 4Op 3Op 1
Op 2
Op 9Op 8
Op 7
Op 6
Op 5
WC 1
Operation 2
5 activities

11. Method of Valuation
Raw
Material
VOH
Direct
Labour
RM
VOH
DL
25% Completed
RM
VOH
DL
50% Completed
RM
VOH
DL
75% Completed
If Product
Cost is 100/=
WIP value is
now 25/=
If Product
Cost is 100/=
WIP value is
now 50/=
If Product
Cost is 100/=
WIP value is
now 75/=

12. When the WIP is 100% completed
WIP Valuation is
FullCostisFinishGood

13. WIP Vs SFG (Semi Finish Goods)
Work Center 1
Op 3Op 1
Op 2
Operation 1 – 50%
completed 85pcs
Operation 2 – 75%
completed 85pcs
Operation 3 – 25%
completed 85pcs
Organization should plan to minimize
WIP value at any given time…

14. How the production techniques
optimize the cost of production
• PULL-KANBAN.avi.flv
Thank You for the listenership
Sugeeshwara Sirimanne
sugee@skillsholdings.com
+94(0)772375595
Colombo – Sri Lanka