In a process costing system, costs flow into finished goods inventory only from the work in process inventory of the last manufacturing process.

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In a process costing system, costs flow continuously from one process to another until they reach the finished goods inventory. Each process's finished goods inventory becomes the work in process for the next process. Therefore, costs do not flow directly from work in process inventory of the last manufacturing process into the finished goods inventory.

In a Process Costing System, Costs Flow into Finished Goods