Question

In a traditional job-order cost system, the issuance of supplies to a production department increases.

Option 1:
a. Finished goods inventory.

Option 2:
b. Cost of goods sold.

Option 3:
c. Raw materials inventory.

Option 4:
d. Work-in-process inventory.

Answer 1

Issuance of supplies to a production department increases work-in-process inventory, signifying that these costs are part of the ongoing manufacturing process and not yet finished goods or cost of goods sold.

Step-by-step explanation:

In a traditional job-order cost system, the issuance of supplies to a production department increases work-in-process inventory. This is because supplies issued for production become part of the manufacturing process, represent variable costs, and are not yet ready to be considered as finished goods or cost of goods sold. Raw materials, once issued to the production department, transition from raw materials inventory into work-in-process, indicating that 'in process' goods are currently being worked on and not yet completed as products ready for sale.