Week 3 - DQ2 - Job Order and Process Costing - ACC206 - Principles of Accounting II Tutorial - AU

Job Order and Process Costing. Manufacturers use three inventory accounts. Name each one and explain what costs each contain.

The manufacturer creates a product from raw materials by adding direct labor and manufacturing overhead. Because at any point in time products are at various stages of completion, manufacturers have three inventory accounts: Raw materials, Work in process, and Finished goods.

Raw materials inventory account - Raw material purchases are recorded in the raw material inventory account if the perpetual inventory method is used, or the raw materials purchases account if the periodic inventory method is used. For example, using the periodic inventory method, the purchase...