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Finished goods

Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.[1]

Manufacturing

The Air New Zealand Boeing 787-9 Dreamliner is an example of a finished good.

Manufacturing has three classes of inventory:

  1. Raw material
  2. Work in process
  3. Finished goods

A good purchased as a "raw material" goes into the manufacture of a product. A good only partially completed during the manufacturing process is called "work in process". When the good is completed as to manufacturing but not yet sold or distributed to the end-user, it is called a "finished good".[2]

This is the last stage for the processing of goods. The goods are ready to be consumed or distributed. There is no processing required in term of the goods after this stage by the seller. Though there may be instance that seller finished goods become buyer's raw materials

Finished goods is a relative term. In a Supply chain management flow, the finished goods of a supplier can constitute the raw material of a buyer.

References

  1. ^ NetSuite.com (2022-08-09). "Inventory Turnover Ratio: Trouble or Paradise?". Oracle NetSuite. Retrieved 2023-06-30.
  2. ^ Gill, Suveera (2015). Cost and Management Accounting: Fundamentals and its Applications. Vikas Publishing House. p. 118. ISBN 978-9325990326. Retrieved 2016-12-20.
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