How to Transfer Completed Production from Work-in-Process to Finished Goods Inventory
Recording the Cost of Goods Manufactured when production is completed and goods move to the finished goods warehouse.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Finished Goods Inventory | Asset (+) | 6,700.00 | - |
| Work-in-Process (WIP) Inventory | Asset (-) | - | 6,700.00 |
💡 Accountant's Note
This represents the 'Cost of Goods Manufactured.' The product is now ready for sale and sitting in the shipping warehouse.
Practitioner & Systems Framework
💻 ERP Architecture
The COGM transfer is triggered by a production order completion or a process completion in the ERP. The transfer amount = Direct Materials + Direct Labor + Applied Manufacturing Overhead accumulated in WIP for the completed units. For standard costing, this transfer is at standard cost per unit. For actual costing, it is at the total actual costs accumulated in WIP divided by completed units. The WIP balance after the transfer represents partially completed production. Reconcile the WIP balance to the production in-progress report — units that are 100% complete should not remain in WIP.
⚠️ Audit Flags
Auditors verify the COGM transfer is supported by production completion records (production order close, quality inspection pass, goods receipt into finished goods store). WIP balances that are not reducing over time (stale WIP) indicate either abandoned production not written off or over-accumulated overhead. Physical WIP counts at year-end must reconcile to the WIP account balance.
📄 Required Documentation
Production order completion record, quality control sign-off, finished goods receipt into warehouse, COGM calculation (direct materials + direct labor + applied overhead), WIP closing balance reconciliation, physical WIP count at year-end, and standard vs. actual cost comparison.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.