Manufacturing Cost Accounting & Finance worked example

Working Capital Tied in WIP at 10% cost of capital: a worked example

This scenario runs the working capital tied in wip calculation on the strong side: 10% cost of capital, with every other input held at its documented default. Use it to justify cycle-time reduction by pricing the cash trapped in a long WIP queue.

The inputs for this scenario

  • Days in process (throughput time): 22 days (unchanged)
  • Daily WIP cost burden: 9,500 $ / day (unchanged)
  • Cost of capital: 10 % (raised for this scenario; the documented default is 9)
  • WIP handling and storage adder: 3,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Tied-up cost = days in process x daily WIP burden x cost of capital% + handling adder) to the inputs above produces each figure below.
  • At this operating point the engine returns 23,900 $ for total working capital tied in wip cost, the number this scenario is built around.
  • At this operating point the engine returns 1,086 $ / piece for working capital tied in wip cost per unit.
  • At this operating point the engine returns 20,900 $ for variable working capital tied in wip cost.
  • At this operating point the engine returns 3,000 $ for fixed working capital tied in wip adder.

How this compares with the baseline

  • Against the tool's baseline example, where cost of capital sits at 9% and the headline result is 21,810 $, this scenario comes in 9.58% above the baseline at 23,900 $.
  • Use it when building a lean business case, sizing the savings from cutting cycle time or batch size, or quantifying the cash impact of a bottleneck. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total working capital tied in wip cost: 23,900 $ (headline result)
  • Working capital tied in wip cost per unit: 1,086 $ / piece
  • Variable working capital tied in wip cost: 20,900 $
  • Fixed working capital tied in wip adder: 3,000 $

Run it with your numbers

  • Every input above is editable in the live Working Capital Tied in WIP calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.