The sum of all amounts transferred from the Work in Process account and into the Finished Goods account represents the Cost of Goods Manufactured for the period

Question

Quizplus · Accepted Answer

This statement is true. Overhead costs are applied to Work in Progress using a predetermined overhead rate, which is calculated by dividing the estimated total overhead costs for the period by the estimated total base units (such as direct labor hours or machine hours) for the period. This predetermined overhead rate is then used to apply overhead costs to each Work in Progress unit based on its usage of the relevant base units.

The Sum of All Amounts Transferred from the Work in Process