COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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only for the first processing department.
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for all departments in the aggregate.
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for each processing department.
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only for the last processing department.
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Detailed explanation-1: -In process costing, the output produced is transferred to different processing units, hence, it is necessary to calculate the production costs to determine the transfer price to the next processing unit. Thus, the correct answer is option C.
Detailed explanation-2: -A production cost report identifies the total cost (direct materials, labor, and overhead), of producing a product. A production cost report helps managers answer several important questions: How much does it cost to produce each unit of product for each department?
Detailed explanation-3: -Managers typically use computer software to prepare production cost reports. They do so for several reasons: Once the format is established, the template can be used from one period to the next. Formulas underlie all calculations, thereby minimizing the potential for math errors and speeding up the process.
Detailed explanation-4: -What is a process costing system? A process costing system is a method typically used within certain sectors of the manufacturing industry to determine the total production cost for each unit of product. It accumulates cost from each process or department and allocates them to the individual products produced.
Detailed explanation-5: -The FIFO method can be used during the preparation of the departmental production cost report while using the process cost system.