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Work-in-process

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Definition of Work-in-process

Work-in-process Image 1

Work-in-process

Any items being converted into finished goods or released from
the warehouse in anticipation of beginning the conversion process.



Related Terms:

Work-in-process inventory

Inventory that has been partially converted through the
production process, but for which additional work must be completed before it can
be recorded as finished goods inventory.


actual cost system

a valuation method that uses actual direct
material, direct labor, and overhead charges in determining
the cost of work in process Inventory


applied overhead

the amount of overhead that has been assigned to work in process Inventory as a result of productive activity; credits for this amount are to an overhead account


job order cost sheet

a source document that provides virtually
all the financial information about a particular job;
the set of all job order cost sheets for uncompleted jobs
composes the work in process Inventory subsidiary ledger


material requisition form

a source document that indicates
the types and quantities of material to be placed into production
or used in performing a service; it causes materials
and its cost to be released from the Raw Material Inventory
warehouse and sent to work in process Inventory



normal cost system

a valuation method that uses actual
costs of direct material and direct labor in conjunction with
a predetermined overhead rate or rates in determining the
cost of work in process Inventory


business process reengineering (BPR)

the process of combining information technology to create new and more effective
business processes to lower costs, eliminate unnecessary
work, upgrade customer service, and increase
speed to market


Work-in-process Image 2

Contract Work Hours and Safety Standards Act

A federal Act requiring federal contractors to pay overtime for hours worked exceeding 40 per week.


Corporate processing float

The time that elapses between receipt of payment from a customer and the
depositing of the customer's check in the firm's bank account; the time required to process customer
payments.


cost-benefit analysis the analytical process of comparing the

relative costs and benefits that result from a specific course
of action (such as providing information or investing in a
project)


Diffusion process

A conception of the way a stock's price changes that assumes that the price takes on all
intermediate values. dirty price. Related: full price


Discouraged Worker

An unemployed person who gives up looking for work and so is no longer counted as in the labor force.


economically reworked

when the incremental revenue from the sale of reworked defective units is greater than
the incremental cost of the rework


FIFO method (of process costing)

the method of cost assignment that computes an average cost per equivalent
unit of production for the current period; keeps beginning
inventory units and costs separate from current period production
and costs


In-house processing float

Refers to the time it takes the receiver of a check to process the payment and
deposit it in a bank for collection.


Ito process

Statistical assumptions about the behavior of security prices. For
details, see the book by Hull listed in the “Bibliography”.


joint process

a manufacturing process that simultaneously
produces more than one product line
joint product one of the primary outputs of a joint process;
each joint product individually has substantial revenuegenerating
ability


Make-Work Project

A project, such as digging holes and filling them up again, that has no useful purpose other than to make work.



modified FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per
equivalent unit but, in transferring units from a department,
the costs of the beginning inventory units and the
units started and completed are combined and averaged


multiprocess handling

the ability of a worker to monitor
and operate several (or all) machines in a manufacturing
cell or perform all steps of a specific task


Net working capital

Current assets minus current liabilities. Often simply referred to as working capital.


net working capital

Current assets minus current liabilities.


network organization

a flexible organization structure that
establishes a working relationship among multiple entities,
usually to pursue a single function


Personal Responsibility and Work Opportunity Reconciliation Act

A federal Act requiring the reporting of new hires into a national database.


Price discovery process

The process of determining the prices of the assets in the marketplace through the
interactions of buyers and sellers.


Process

A series of linked activities that result in a specific objective. For example, the
payroll process requires the calculation of hours worked, multiplication by hourly
rates, and the subtraction of taxes before the final objective is reached, which is the
printing of the paycheck.


process benchmarking

benchmarking that focuses on practices and how the best-in-class companies achieved their results


process complexity

an assessment about the number of processes through which a product flows



Process costing

A method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced.


Process costing

A costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products.


process costing system

a method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products;
it accumulates costs by cost component in each production department and assigns costs to units using equivalent units of production


Process flow production

A production configuration in which products are continually
manufactured with minimal pauses or queuing.


process map

a flowchart or diagram indicating every step
that goes into making a product or providing a service


process productivity

the total units produced during a period
using value-added processing time


process quality yield

the proportion of good units that resulted from the activities expended


processing time

the actual time consumed performing the
functions necessary to manufacture a product


product- (or process-) level cost

a cost that is caused by the development, production, or acquisition of specific products or services


Purchased In-Process Research and Development

Unfinished research and development that is acquired from another firm.


Reprocessed material

Material that has been reworked and returned to stock.


Rework

Refers to a product that does not meet a company’s minimum quality standards,
but which is then repaired in order to meet those standards.


Rework

The refurbishment of a faulty part.


statistical process control (SPC)

the use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations
are typically the points at which the process produces "errors", which can be defective goods or poor service


strict FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the
cost of the beginning units separate from the cost of the
units started and completed during the current period


weighted average method (of process costing)

the method of cost assignment that computes an average cost per
equivalent unit of production for all units completed during
the current period; it combines beginning inventory units
and costs with current production and costs, respectively,
to compute the average


Work-in-progress

Goods or services that have commenced the production process but are incomplete and unable to be sold.


Work Week

A fixed period of 168 consecutive hours that recurs on a consistent basis.


Workers' Compensation Benefits

Employer-paid insurance that provides their employees with wage compensation if they are injured on the job.


Working capital

Defined as the difference in current assets and current liabilities (excluding short-term
debt). Current assets may or may not include cash and cash equivalents, depending on the company.


Working capital

Current assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank.


working capital

total current assets minus total current liabilities


Working capital

The amount of a company’s current assets minus its current liabilities;
it is considered to be a prime measure of its level of liquidity.


Working Capital

Current assets minus current liabilities


Working Capital

Funds invested in a company's cash, accounts receivable and inventory. Net working capital is current assets minus current liabilities.


Working Capital Cash

The cash component of working capital.


Working capital management

The management of current assets and current liabilities to maximize shortterm liquidity.


Working capital ratio

working capital expressed as a percentage of sales.


Workout

Informal arrangement between a borrower and creditors.


workout

Agreement between a company and its creditors establishing the steps the company must take to avoid bankruptcy.


Workout period

Realignment period of a temporary misaligned yield relationship that sometimes occurs in
fixed income markets.


Automated Clearing House (ACH)

A collection of 32 regional electronic interbank networks used to
process transactions electronically with a guaranteed one-day bank collection float.


bottleneck

any object or facility whose processing speed is
sufficiently slow to cause the other processing mechanisms
in its network to experience idle time


empowerment

the process of giving workers the training
and authority they need to manage their own jobs


Inventory

Those items included categorized as either raw materials, work-inprocess,
or finished goods, and involved in either the creation of products or service
supplies for customers.


Just-in-time manufacturing

The term for several manufacturing innovations that
result in a “pull” method of production, in which each manufacturing workstation
creates just enough product for the immediate needs of the next workstation in the
production process.


Kaizen costing

The process of continual cost reduction that occurs after a product
design has been completed and is now in production. Cost reduction techniques can
include working with suppliers to reduce the costs in their processes, implementing
less costly re-designs of the product, or reducing waste costs.


kanban

the Japanese word for card; it was the original name
for a JIT system because of the use of cards that indicated
a work center’s need for additional components during a manufacturing process


Proration

The allocation of either under- or over-allocated overhead costs among the
work-in-process, finished goods, and cost of goods sold accounts at the end of an
accounting period.


Raw materials inventory

The total cost of all component parts currently in stock that
have not yet been used in work-in-process or finished goods production.


Temporary Life Insurance

Temporary insurance coverage is available at time of application for a life insurance policy if certain conditions are met. Normally, temporary coverage relates to free coverage while the insurance company which is underwriting the risk, goes through the process of deciding whether or not they will grant a contract of coverage. The qualifications for temporary coverage vary from insurance company to insurance company but generally applicants will qualify if they are between the ages of 18 and 65, have no knowledge or suspicions of ill health, have not been absent from work for more than 7 days within the prior 6 months because of sickness or injury and total coverage applied for from all sources does not exceed $500,000. Normally a cheque covering a minimum of one months premium is required to complete the conditions for this kind of coverage. The insurance company applies this deposit towards the cost of a policy at its issue date, which may be several weeks in the future.



 

 

 

 

 

 

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