Inventory Shipped FOB Shipping Point and in Transit on the Last

question 19

Multiple Choice

Inventory shipped FOB shipping point and in transit on the last day of the year should be included in:

• A)the inventory balance of the seller.
• B)the inventory balance of the buyer.
• C)neither the inventory balance of the buyer or the seller.
• D)both the inventory balance of the buyer and the seller.

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Definitions:

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, not directly attributable to a specific product.

Weighted-Average Cost Method

An inventory costing method that assigns a weighted average cost to each unit of inventory on hand.

Conversion Costs

Costs incurred to convert raw materials into finished products, which typically include labor and manufacturing overhead.

Work In Process Inventory

The inventory that includes items currently being manufactured but not yet completed or ready for sale.