Question

Which of the following is a true statement about process costing?

A) None of the answer choices is correct.
B) If a department has transferred-in costs, it means that the inventory accounts were not closed correctly at the end of the last period.
C) The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.
D) total transferred-in cost is equal to the total transferred-out cost during a period

Answer 1

The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.

Step-by-step explanation:

The correct statement about process costing is: C) The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.

In process costing, costs are accumulated and allocated to products or services based on the production process. The costs incurred to produce a product or service are assigned to each unit based on a predetermined measure, such as the number of units produced. Once the products are completed in their final department, the costs are transferred to the Finished Goods inventory.

For example, in a manufacturing company, if a product goes through multiple departments before it is finished, the costs incurred in each department will be accumulated and allocated. Once the product is completed in the final department, the costs are transferred to the Finished Goods inventory, ready for sale.