COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a variety of different products are produced, each one requiring different types of materials, labor, and overhead.
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the focus of attention is on a particular job or order.
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similar products are mass-produced.
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individual products are custom made to the specification of customers.
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Detailed explanation-1: -Process costing is most commonly used when goods are mass produced and when the costs linked to individual units cannot be easily distinguished from each other. Under process costing, costs build up over a fixed period, and are then assigned to all the units produced throughout that time frame.
Detailed explanation-2: -A process cost accounting system is appropriate for similar products that are continuously mass produced. The perpetual inventory method cannot be used in a job order cost system. A job order cost system and a process cost system are two alternative methods for valuing inventories.
Detailed explanation-3: -Process costing is appropriate for companies that produce a continuous mass of like units through series of operations or process. Also, when one order does not affect the production process and a standardization of the process and product exists.
Detailed explanation-4: -Process costing is used in companies with homogenous products, which are manufactured in large quantities.
Detailed explanation-5: -Process costing is most appropriate when manufacturing large batches of homogenous products. per unit of production.