Learning Objective 03-P3: Record the flow of production costs in process costing. Raw materials purchases are debited to Raw materials inventory.

 Learning Objective 03-P3: Record the flow of production costs in process costing.

Raw materials purchases are debited to Raw materials inventory. Direct materials used are debited to Work in process inventory and credited to Raw materials inventory. Indirect materials used are debited to Factory overhead and credited to Raw materials inventory. Direct labor used is debited to Work in process inventory and credited to Factory wages payable. Indirect labor used is debited to Factory overhead and credited to Factory wages payable. Other actual factory overhead costs are debited to Factory overhead. Estimated overhead costs are allocated, using a predetermined overhead rate, to the different processes. This allocated amount is credited to the Factory Overhead account and debited to the Work in Process Inventory account for each separate process. As units are finished, Finished goods inventory is debited and Work in process is credited. Units sold are debited to Cost of goods sold and credited to Finished goods inventory.

 Knowledge Check 01

Raw materials which will be used as direct materials are initially included in

multiple choice

    work in process inventory.
    raw materials inventory. Correct
    finished goods inventory.
    factory overhead.

Explanation

Knowledge Check 01

When raw materials are purchased, regardless of if they are direct or indirect materials, they are initially included in raw materials inventory.

Knowledge Check 01

The journal entry to purchase materials on credit for factory use includes which of the following?

Explanation

Knowledge Check 01

The journal entry includes a Debit to Raw Materials Inventory and a Credit to Accounts Payable.

Knowledge Check 01

The journal entry to assign costs of direct labor used in production includes which two of the following?



Explanation

Knowledge Check 01

The journal entry includes a Debit to Work in Process Inventory and a Credit to Factory Wages Payable.

Knowledge Check 01

The journal entry to record the use of utilities in a factory includes which of the following:



Explanation

Knowledge Check 01

The journal entry to record the use of utilities in a factory includes a Debit to Factory Overhead and a Credit to Factory Utilities Payable.

Knowledge Check 01

The journal entry to transfer completed products from production to finished goods inventory includes which two of the following?



Explanation

Knowledge Check 01

The journal includes a Debit to Finished Goods Inventory and a Credit to Work in Process Inventory.

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