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1119503663_Intermediate_Accounting_17th_Edition 1

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statements of a merchandising concern. A manufacturer normally has three inventory accounts: Raw Materials, Work in Process, and Finished Goods. Companies report the cost assigned to goods and materials on hand but not yet placed into production as raw materials inventory. They report the cost of the raw materials on which production has been started but not completed, plus the direct labor cost applied specifically to this material and a ratable share of manufacturing overhead costs, as work in process inven- tory. Finally, they report the costs identified with the completed but unsold units on hand at the end of the fiscal period as finished goods inventory.

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