ECONOMICS

Detailed explanation-1: -If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system. False. Process manufacturers typically use large machines to process a continuous flow or raw materials into a finished state.

Detailed explanation-2: -Thus, a job order cost system is used for custom jobs when it is easy to determine the cost of materials and labor used for each job. A process cost system is often less expensive to maintain and works best when items are identical and it is difficult to trace the exact cost of materials and labor to the final product.

Detailed explanation-3: -Process costing is a method of costing used mainly in manufacturing where units are continuously mass-produced through one or more processes. Examples of this include the manufacture of erasers, chemicals or processed food.

Detailed explanation-4: -Question: In a process cost accounting system, a separate Work in Process Inventory account is maintained for each producing department. a. True.

Detailed explanation-5: -The process cost system is appropriate where few products are manufactured and each product is made to customers’ specifications. If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.