Regarding the Flow of Costs Through the Inventory Accounts,which of the Following

question 130

Multiple Choice

Regarding the flow of costs through the inventory accounts,which of the following statements is incorrect?

• A) The final amount at each stage is added at the beginning of the next stage.
• B) The costs flow from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.
• C) Purchases and freight in are debited to the Work-in-Process Inventory account.
• D) The format for computing the amount used, manufactured, or sold is the same for all three inventory accounts.

---

Definitions:

July Production

The volume or quantity of goods and services produced by a company during the month of July.

Variable Overhead Efficiency Variance

The difference between actual and expected (or budgeted) variable overhead costs based on the actual level of production or activity.

July

The seventh month of the year in the Gregorian calendar, commonly associated with the height of summer in the Northern Hemisphere.

Variable Overhead Efficiency Variance

A measurement of the difference between the expected (or standard) amount of variable overhead based on actual output and the actual variable overhead incurred.