When direct materials are requisitioned, they flow directly into

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Quizplus · Accepted Answer

Direct materials are used in the production process to create finished goods, but they are not considered finished goods until the production process is completed. Therefore, the direct materials flow into the work in process inventory account, which tracks the costs of all materials, labor and overhead incurred during production. Cost of goods sold account is used when finished goods are sold. Finished goods inventory account is used when finished goods are stored for future sale. Manufacturing overhead account is separate from direct materials and tracks other production costs, such as indirect materials and labor.

When Direct Materials Are Requisitioned, They Flow Directly into