Production costs are transferred from one Work-in-Process Inventory account to the next and eventually to ________.
A) Manufacturing Overhead
B) Sales Revenue
C) Finished Goods Inventory
D) Accounts Payable

Question

Quizplus · Accepted Answer

Production costs are initially added to the Work-in-Process Inventory account, but as the products move through the production process, the costs are transferred to the next Work-in-Process Inventory account until they reach the Finished Goods Inventory account. The costs are only charged to Manufacturing Overhead when they cannot be specifically allocated to a unit of production. Sales Revenue and Accounts Payable are not related to the transfer of production costs.

Production Costs Are Transferred from One Work-In-Process Inventory Account to the Next