When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of raw materials inventory and into finished goods inventory.

Question

Quizplus · Accepted Answer

When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of raw materials inventory and into Work in Progress (WIP) inventory, not finished goods inventory. The cost is not transferred into finished goods inventory until the goods are completed and ready to be sold.

When Raw Materials Are Transferred Out of the Storeroom to the Factory