Study Questions for Chapter 19

Study Questions for Chapter 19 - LeAnna Kaiser Chapter 19...

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LeAnna Kaiser Accounting 2 Study Questions for Chapter 19 1. Describe the three product costs and the accounts that they flow through. Direct materials : DM is the cost of any material that is an integral part of the finished product. It starts out in the Materials Inventory account as they are purchased. After being requested through a materials requisition form, they flow into Works in Process inventory. When the goods are manufactured, it becomes part of “cost of goods manufactured” and flows into Finished Goods Inventory . When goods are sold, it flows into Cost of Goods Sold . Direct labor : Is the cost of employee wages that are an integral part of the finished product. It starts out in Works in Process inventory . When the goods are manufactured, it becomes part of “cost of goods manufactured” and flows into Finished Goods Inventory . When goods are sold, it flows into Cost of Goods Sold . Factory Overhead : Costs other than DM & DL that are incurred in the manufacturing process. They start out in their own subsidiary account which gives a total to be placed in Works in Process Inventory . When the goods are manufactured, it becomes part of “cost of goods manufactured” and flows into Finished Goods Inventory
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Study Questions for Chapter 19 - LeAnna Kaiser Chapter 19...

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