In financial accounting, the value of work in process (WIP) is equal to:

• A. Total sales revenue minus cost of goods sold
• B. Finished goods inventory at the end of the period
• C. Net sales minus operating expenses
• D. Direct materials used + Direct labor + Applied manufacturing overhead for incomplete units

Answer: (D)

Verified step by step guidance

1. Understand the concept of Work in Process (WIP): WIP refers to the inventory that is partially completed during the manufacturing process. It includes costs incurred for direct materials, direct labor, and applied manufacturing overhead for incomplete units.
2. Identify the components of WIP: The value of WIP is calculated by summing up the costs of direct materials used, direct labor, and applied manufacturing overhead for the units that are not yet completed.
3. Direct materials used: Determine the cost of raw materials that have been introduced into the production process but are not yet part of finished goods.
4. Direct labor: Calculate the wages paid to workers who are directly involved in the production of the incomplete units.
5. Applied manufacturing overhead: Allocate indirect costs (e.g., factory utilities, depreciation, and maintenance) to the incomplete units based on a predetermined overhead rate.