Asked by Kesha Boston on Jul 13, 2024
Verified
All costs of the processes in a process costing system ultimately pass through the cost of goods sold account.
Process Costing System
An accounting method used where similar products are mass-produced, expenses are averaged over the units, making it easier to determine per-unit costs.
Cost Of Goods Sold
The immediate expenses linked to manufacturing goods sold by a company, encompassing both materials and labor costs.
- Gain an understanding of how direct materials, direct labor, and factory overhead contribute to process costing mechanisms.
- Understand the significance of managing production expenses and the methods used for their analysis.
Verified Answer
KO
Kalista OwensJul 15, 2024
Final Answer :
True
Explanation :
In a process costing system, the costs incurred in each process are accumulated in the work-in-progress account and then transferred to the finished goods account. When the finished goods are sold, the costs are transferred to the cost of goods sold account. Therefore, all costs ultimately pass through the cost of goods sold account.
Learning Objectives
- Gain an understanding of how direct materials, direct labor, and factory overhead contribute to process costing mechanisms.
- Understand the significance of managing production expenses and the methods used for their analysis.
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