How do you account for inventory in a manufacturing plant?

In a manufacturing plant, inventory is typically accounted for using a perpetual inventory system, which tracks inventory levels in real-time through software and barcoding systems. Raw materials, work-in-progress (WIP), and finished goods are categorized separately to provide clarity on production efficiency and stock levels. Costs associated with inventory, such as purchase costs, storage, and handling, are recorded to determine the total value of the inventory on hand. Regular audits and reconciliations are also conducted to ensure accuracy and compliance with accounting standards.