TRUE OR FALSE A. True or False / When units are completed, costs are transferred out...
TRUE OR FALSE
A. True or False / When units are completed, costs are transferred out of WIP and into finished goods inventory.
B True or False / When units are sold, costs are transferred out of finished goods inventory and into cost of goods sold (COGS).
C True or False / MOH is increased by the purchase of indirect materials, indirect labor and costs to run the factory, and reduced by MOH applied to WIP.
D. True or False / In a perfect world, the MOH account will be equal to -0- at the end of the year.
E. True or False / If there is a small, immaterial balance in the MOH account, it can be closed out to COGS.
F. True or False / If there is a large, material balance in the MOH account, it should be allocated proportionately to WIP, finished goods, and COGS.
Homework Answers
Solution:
A. True, When units are completed, costs are transferred out of WIP and into finished goods inventory.
B. True, When units are sold, costs are transferred out of finished goods inventory and into cost of goods sold (COGS).
C. True, MOH is increased by the purchase of indirect materials, indirect labor and costs to run the factory, and reduced by MOH applied to WIP.
D. True, In a perfect world, the MOH account will be equal to -0- at the end of the year.
E. True, If there is a small, immaterial balance in the MOH account, it can be closed out to COGS.
F. True, If there is a large, material balance in the MOH account, it should be allocated proportionately to WIP, finished goods, and COGS.
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