The existence of ending work in process inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP inventory,and how much of the cost should be assigned to units completed during the period.

Question

Quizplus · Accepted Answer

This statement is true because ending work in process inventory represents units that are partially completed at the end of the accounting period. Since these units are not yet completed, they have not yet incurred all of the manufacturing costs that will be required to finish them. Therefore, a portion of the total manufacturing cost should be assigned to the units still in ending WIP inventory, and the remaining cost should be assigned to the units completed during the period. This allocation of costs is necessary to ensure accurate financial reporting and product costing.

The Existence of Ending Work in Process Inventory Necessitates How