COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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work in process, cost of goods sold, finished goods
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finished goods, work in process, cost of goods sold
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finished goods, cost of goods sold, work in process
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work in process, finished goods, cost of goods sold
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Detailed explanation-1: -What Is Flow of Costs? Flow of costs refers to the manner or path in which costs move through a firm. Typically, the flow of costs is relevant with manufacturing companies whereby accountants must quantify what costs are in raw materials, work in process, finished goods inventory, and cost of goods sold.
Detailed explanation-2: -Cost Flow in Process Costing The typical manner in which costs flow in process costing is that direct material costs are added at the beginning of the process, while all other costs (both direct labor and overhead) are gradually added over the course of the production process.
Detailed explanation-3: -There are four generally accepted methods for assigning costs to ending inventory and cost of goods sold: specific cost; average cost; first‐in, first‐out (FIFO); and last‐in, first‐out (LIFO).
Detailed explanation-4: -The flow of manufacturing costs is a cumulative sum, including the direct and overhead costs incurred in the different stages of the manufacturing processes, in the life-cycle of a product, up until it has reached its point of sale.