GENERAL KNOWLEDGE

Detailed explanation-1: -What is included in finished goods? Finished goods include a number of expenses, from raw materials through work in progress to the final product. Direct labor, direct materials and direct overhead factor in, as do storage costs for finished goods held in inventory.

Detailed explanation-2: -Finished goods are products that have completed the manufacturing process but have yet to be sold to customers.

Detailed explanation-3: -Finished goods inventory is the total stock available for customers to purchase that can be fulfilled. Using the finished goods inventory formula, sellers can calculate the value of their goods for sale. ‘Finished goods’ is a relative term, as a seller’s finished goods may become a buyer’s raw materials.

Detailed explanation-4: -Goods-in-process is the cost of unfinished goods in the manufacturing process, including labor, raw materials, and overhead. It appears as a current asset on a company’s balance sheet alongside the other two manufacturing inventory classifications: raw materials and finished goods.