How are manufacturing costs treated in process costing?
A)The manufacturing costs are added only when the goods are in finished inventory.
B)The manufacturing costs are added only when the goods are sold.
C)The manufacturing costs always follow the physical movement of the product.
D)None of the above.

Question

Quizplus · Accepted Answer

In process costing, manufacturing costs (such as direct materials, direct labor, and factory overhead) are allocated to the product as it moves through the production process, rather than when it is completed or sold. These costs always follow the physical movement of the product and are assigned to a particular stage of production based on the degree of completion of the units in that stage. Therefore, choice C is the correct answer. Choices A and B are incorrect because manufacturing costs are added to the product as it moves through the production process, not just when it is finished or sold. Choice D is incorrect because there is a specific method for treating manufacturing costs in process costing, as described above.

How Are Manufacturing Costs Treated in Process Costing