What is the correct order in which the flow of costs in a manufacturing organisation occurs?
I. Transfer finished goods to stock of finished goods
II. Purchase stocks of raw materials
III. Transfer finished goods to cost of sales
IV. Charge raw materials, direct labour and factory overhead to work in process

Question

Quizplus · Accepted Answer

The correct order starts with purchasing stocks of raw materials (II), then charging raw materials, direct labour, and factory overhead to work in process (IV), followed by transferring finished goods to the stock of finished goods (I), and finally transferring finished goods to the cost of sales (III).

What Is the Correct Order in Which the Flow of Costs