WIP is required to calculate the work in process on a particular date. That is the value of Materials/overhead are in the process of production are in semi finished position. WIP is neither a Raw Material or Finished product and can not be identifed in vlumne and does not carry any material code.
When materials are issued against the production order/process orders the Consumption account is debited. and since the finished product is not completed this is not treated as a finished product also.
Hence the system calculates the value against the pending process orders on a particular date. The system calcualtes all the pending orders materials issues values and applicable overhead till that date.
On Execution of the t Code KKAO the system credits materials account ( i.e reversing the expenses ) and debits the current assets stock value as WIP, since it is a asset
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