Manufacturing Cost Accounting & Finance worked example

Working Capital Tied in WIP at 6.48% cost of capital: a worked example

Suppose cost of capital falls to 6.48%. This page works the full calculation at that level so you can see exactly which result moves and by how much. Estimates the financing cost of cash locked in work-in-process before it bills out.

The inputs for this scenario

  • Days in process (throughput time): 22 days (held at the documented default)
  • Daily WIP cost burden: 9,500 $ / day (held at the documented default)
  • Cost of capital: 6.48 % (the input this scenario stresses; the baseline uses 9)
  • WIP handling and storage adder: 3,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Tied-up cost = days in process x daily WIP burden x cost of capital% + handling adder.
  • Total working capital tied in wip cost works out to 16,543 $ at these inputs, and this is the headline figure for the scenario.
  • Working capital tied in wip cost per unit works out to 752 $ / piece at these inputs.
  • Variable working capital tied in wip cost works out to 13,543 $ at these inputs.
  • Fixed working capital tied in wip adder works out to 3,000 $ at these inputs.

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 24.15% below the baseline at 16,543 $.
  • It computes the carrying cost of cash locked in work-in-process given days in process, the daily WIP cost burden, your cost of capital, and a fixed handling and storage adder. When the numbers land here, the stressed input is the lever to work; the walkthrough above shows exactly how much each output recovers as it climbs back toward the baseline.

Results at a glance

  • Total working capital tied in wip cost: 16,543 $ (headline result)
  • Working capital tied in wip cost per unit: 752 $ / piece
  • Variable working capital tied in wip cost: 13,543 $
  • Fixed working capital tied in wip adder: 3,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Working Capital Tied in WIP calculator, set cost of capital to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.