Attached is a diagram that distinguishes inventoriable and period costs from Horngren's Cost Accounting: Managerial Emphasis, 8th edition.
If I understood it correctly, the "Inventoriable Prime Costs" under "Ledger Transactions" for a manufacturing company should be describing the direct material inventory for the ending period.
My question is why is "DM transferred to WIP" (pointed by blue arrow) deducted when "DM used" is already deducted? Isn't direct material used deducted and transferred to work-in-process already?
My other question is why is DML (pointed by red arrow) added again in the finished good inventory when it was already included in the work-in-process inventory.
Thank you.
If I understood it correctly, the "Inventoriable Prime Costs" under "Ledger Transactions" for a manufacturing company should be describing the direct material inventory for the ending period.
My question is why is "DM transferred to WIP" (pointed by blue arrow) deducted when "DM used" is already deducted? Isn't direct material used deducted and transferred to work-in-process already?
My other question is why is DML (pointed by red arrow) added again in the finished good inventory when it was already included in the work-in-process inventory.
Thank you.
