Question

Which of the following is the correct flow of manufacturing costs? 

• work in process, finished goods, raw materials, cost of goods sold 

• raw materials, finished goods, cost of goods sold, work in process 

• cost of goods sold, raw materials, work in process, finished goods 

• raw materials, work in process, finished goods, cost of goods sold

Which of the following costs are not included in finished goods inventory? 

• direct materials

• direct labor

• chief financial officer's salary

• factory overhead

For which of the following businesses would the job order cost system be appropriate?

• Lumber mill

• hospital 

• oil refinery

• canned soup processor

Answer 1

Answer:-

1. The correct flow of Manufacturing cost must be "Raw Materials>>Work In Process>>Finished Goods>>Cost of Goods Sold" as this the flow of Production process as well in Manfacturing Industries.

2. "Cheif Financial Officer;s Salary" must not be included in the valuation of Fished Goods Invesntory as this is an Indirect Expense and only direct expenses must be included as a cost for valuation purposes.

3. Job order costing or job costing is a system for assigning manufacturing costs to an individual product or batches of products. Generally, the job order costing system is used only when the products manufactured are sufficiently different from each other. (When products are identical or nearly identical, the process costing system will likely be used.)

Since there is a significant variation in the products manufactured, the job order costing system will create a job cost record for each item, job or special order. The job cost record will report the direct materials and direct labor actually used plus the manufacturing overhead assigned to each job.

So Answer must be "Lumber Mill"