directly to Work in Process can be viewed most simply as products on an assembly line. The direct materials, direct labor, and manufacturing overhead costs added to Work in Exhibit 2-7 are the costs needed to complete these products as they move along this assembly line. Notice from the exhibit that as goods are completed , their costs are transferred from Work in Process to Finished Good to Cost of Goods Sold. At this point the various costs required to make the product are finally recorded as an expense. Unit that point, these costs are in inventory accounts on the balance sheet.