ECONOMICS

Detailed explanation-1: -The answer is TRUE. Process costing comprises passing on accumulated costs from one department to the next. Process costing is a mechanism for allocating overall production costs to homogeneous units generated via a continuous process that often comprises numerous phases or departments .

Detailed explanation-2: -With process costing, companies track the flow of costs from department to department, rather than tracking costs for each individual item. Each department adds direct labor and manufacturing overhead costs, plus the cost of any raw materials it uses.

Detailed explanation-3: -Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. This costing method is used in industries like chemicals, textiles, steel, rubber, sugar, shoes, petrol etc. Process costing is also used in the assembly type of industries also.

Detailed explanation-4: -Materials, labor, and/or manufacturing overhead can be added in any processing department. Transferred in costs are accounting for as direct materials, direct labor and overhead. Units are always 100% complete for transferred in costs.

Detailed explanation-5: -In process costing, a separate Work in Process account is maintained for each processing department. Instead of using a job cost sheet, production reports are prepared for each department (or process) to accumulate costs of production and to account for units worked on.