Ending WIP valuation in ERP for Vietnam: weighted average by percentage of completion
Written by the S4 Consulting Oracle NetSuite team · Reviewed by Lạc Phạm, Solution Architect, S4 Consulting · Updated 28 Oct 2026
Ending WIP is the output still in production on the closing date, and the value placed on it decides how much of the period’s manufacturing cost moves into finished goods and how much stays in account 154. In an ERP, the most common and most defensible approach is the weighted average method by percentage of completion: convert work in progress into equivalent units, compute an average cost per unit, then split cost between finished goods and work in progress. This article compares the methods Vietnamese accountants use, works through a numeric example and explains how S4 eSuite VN Actual Costing measures work in progress inside Oracle NetSuite.
Which methods do Vietnamese accountants use to measure ending WIP?
Five approaches are common, differing in detail and in the data they need. The Vietnamese accounting regime does not impose a single method; it asks the company to choose one that fits its production and to apply it consistently.
| Method | How work in progress is measured | Fits when |
|---|---|---|
| Direct materials only | WIP carries material cost only; all conversion cost goes to finished goods | Materials dominate cost and WIP is small and stable |
| Equivalent units, weighted average | WIP converted by percentage of completion; opening and current costs pooled into one average | Conversion cost is material and WIP swings between periods |
| Equivalent units, FIFO | Completion of opening WIP is costed apart from new production | Period efficiency must be tracked and extra complexity is acceptable |
| Standard cost | WIP quantity at each operation times the standard cost of that operation | Detailed, regularly updated standards exist |
| Flat 50% of conversion | All WIP treated as half complete | WIP is small and even, not worth measuring in detail |
Weighted average by percentage of completion strikes a good balance between accuracy and data effort, which is why it is built into S4-APC.
How does NetSuite record work in progress on open work orders?
In a common configuration, NetSuite tracks WIP as the balance of each open work order: materials issued and costs absorbed at predetermined rates, less what has moved to finished goods through completions. That mirrors the physical flow well, but the balance is not restated by percentage of completion and does not yet include the month’s actual payroll, depreciation and power still sitting in expense accounts.
As a result, when Finance prepares the statutory WIP schedule, it exports open orders to a spreadsheet, keys in completion percentages, allocates conversion cost by hand and posts an adjustment. The NetSuite 154 balance and the spreadsheet drift apart, and by year end someone has to explain a difference nobody can trace. This description may vary by NetSuite version and configuration.
How are equivalent units and the weighted average calculated?
Equivalent units equal completed output plus ending work in progress multiplied by its percentage of completion; the average unit cost equals opening plus current-period cost divided by equivalent units. Illustrative example: a work order completes 900 units in the month and has 200 units in progress at 50% completion. Materials enter at the start of the process, so for materials the 200 units count in full; for conversion cost they count as 100 units.
| Cost element | Opening WIP (VND) | Current period (VND) | Equivalent units | Unit cost (VND) | Ending WIP (VND) | Finished goods (VND) |
|---|---|---|---|---|---|---|
| Materials | 22,000,000 | 198,000,000 | 900 + 200 = 1,100 | 200,000 | 40,000,000 | 180,000,000 |
| Conversion | 30,000,000 | 270,000,000 | 900 + 100 = 1,000 | 300,000 | 30,000,000 | 270,000,000 |
| Total | 52,000,000 | 468,000,000 | 70,000,000 | 450,000,000 |
Finished unit cost is VND 500,000 (450,000,000 / 900). Check: total cost of VND 520,000,000 equals VND 450,000,000 of finished goods plus VND 70,000,000 of work in progress. Ignoring WIP and loading all cost onto the 900 finished units would give VND 577,778 per unit, about 15.6% higher, and next month would look unusually cheap when the 200 units finish without carrying their cost.
Measure WIP by percentage of completion, inside NetSuite
Weighted average by equivalent units, automatic carry-forward to the next period and a 154 reconciliation after every costing run.
Explore S4 eSuite VN Actual Costing →Download the PDF brochure
How does S4-APC measure WIP and carry it forward?
S4-APC measures ending WIP by the weighted average method based on percentage of completion and uses the same equivalent units as the allocation base. Orders still in progress therefore receive their share of the month’s actual cost instead of pushing everything onto completed orders. In multi-level production, sub-assemblies are costed first and their value flows into the finished goods that consume them.
WIP cost carries forward automatically to the next period and moves into finished goods when the work order completes, with no manual reversal at the start of each month. WIP and WIP variance accounts are mapped in configuration, so the setup fits each company’s chart of accounts and follows the Vietnamese regime it applies, including Circular 99/2025/TT-BTC. Each allocation line keeps the base value, the ratio and the amount per order, so auditors can trace the 154 balance back to individual work orders.
How should the percentage of completion be set and controlled?
Completion percentage drives the WIP figure directly, so plant and Finance need one agreed rule. Manufacturers typically use one of these:
- By operation: the number of routing operations completed converts to a percentage, which suits clear multi-step processes.
- Supervisor confirmation: the floor supervisor confirms percentages at the month-end count, with a signed sheet kept in the close pack.
- Fixed rate: a single rate for product families with short cycles and stable WIP.
Whatever the choice, write it into the costing policy and keep it consistent. In S4-APC, the pre-calculation checks flag work orders closed too early, a frequent cause of lost WIP, and Finance can run a simulation before sending the run for approval and posting.
How do reports and the 154 reconciliation confirm the WIP balance?
After posting, S4-APC checks balances in 154, 621, 622 and 627: expense accounts should be fully cleared and 154 should agree with the WIP value calculated. The check recognizes shared costs that belong to another plant, so a pool split across plants does not trigger false differences. The ending WIP report lists each order with its completion percentage, equivalent units and value by cost element, and can be exported to Excel or PDF for the close pack.
WIP is also shaped by two other VAS 02 adjustments: fixed manufacturing overhead at normal capacity and abnormal material loss. The wider picture is in actual manufacturing cost on NetSuite, and the full list of functions and 18 reports is on the S4 eSuite VN Actual Costing page.
Frequently asked questions
What is ending WIP?
Output still in production and not finished on the closing date. Its value is the closing balance of account 154.
How are equivalent units calculated?
Completed output plus ending WIP multiplied by its percentage of completion. For example, 900 completed and 200 at 50% give 1,000 equivalent units.
Why do materials and conversion cost have different equivalent units?
When materials enter at the start, WIP already holds all its materials and counts in full; conversion cost builds up gradually, so WIP is converted by percentage of completion.
Which method does S4-APC use for work in progress?
S4-APC uses the weighted average method based on percentage of completion and carries WIP cost forward automatically.
How do I know the 154 balance is right?
After posting, agree 154 to the calculated WIP value and confirm that 621, 622 and 627 are cleared. S4-APC runs this reconciliation automatically.
