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

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 (i), followed by transferring the finished goods to stock of finished goods (iv), and finally transferring the cost of these finished goods to cost of sales when they are sold (iii).

What Is the Correct Order in Which the Flow of Costs