When direct materials are issued from inventory to production under a job order costing system an increase is recorded in the:

Question

Quizplus · Accepted Answer

Direct materials are issued from inventory to production in order to start and maintain the production process. This means the materials are being used in the creation of a specific job or batch of products. As a result, an increase in the work in process inventory account is recorded to reflect the cost of the direct materials used in that production. Choice A is incorrect because materials are being taken out of inventory, not added to it. Choice B is incorrect because manufacturing overhead is not impacted by the direct materials being used. Choice C is incorrect because finished goods inventory is only recorded when the production process is complete and the products are ready to be sold.

When Direct Materials Are Issued from Inventory to Production Under