In a job order cost system it would be correct in recording the purchase of raw materials to increase
A)Work in Process Inventory.
B)Work in Process and Manufacturing Overhead.
C)Raw Materials Inventory.
D)Finished Goods Inventory.

Question

Quizplus · Accepted Answer

When raw materials are purchased, they are initially recorded in the Raw Materials Inventory account. This account represents the cost of all purchased materials that have not yet been used in production. As the materials are later used in production, their cost is transferred from Raw Materials Inventory to Work in Process Inventory (Option A), which represents the cost of all materials, labor, and overhead used to produce goods that are still in the production process. Manufacturing Overhead (Option B) is a separate account used to accumulate indirect costs such as rent, utilities, and equipment depreciation. Finally, when the goods are completed, their cost is transferred from Work in Process Inventory to Finished Goods Inventory (Option D). However, the initial purchase of raw materials is recorded directly in Raw Materials Inventory and does not impact any of the other accounts until the materials are actually used in production.

In a Job Order Cost System It Would Be Correct