Flow of goods through production

Definition

The flow of goods through production refers to the movement and transformation of raw materials into finished products. It involves various stages such as purchasing, manufacturing, and distribution in a sequential manner.

5 Must Know Facts For Your Next Test

1. It includes the steps of receiving raw materials, work-in-progress inventory, and finished goods.
2. Job Order Costing tracks costs for each individual job or batch, while Process Costing averages costs over continuous units.
3. Materials requisition forms are used to document the use of raw materials in production.
4. Work-in-progress (WIP) accounts accumulate costs during the production process until items are completed.
5. Finished goods inventory represents completed products that are ready for sale.

Review Questions

• What are the primary stages involved in the flow of goods through production?
• How does Job Order Costing differ from Process Costing in tracking production costs?
• What role do materials requisition forms play in the flow of goods through production?

Related terms

Job Order Costing:

A costing method that assigns costs to specific jobs or batches based on their distinct requirements.

Process Costing:

A costing method that accumulates and averages costs over continuous mass production processes.

Work-In-Progress (WIP): Inventory that is partially completed but not yet ready for sale as finished goods.