ECONOMICS

Detailed explanation-1: -In accounting, process costing is a method of assigning production costs to units of output. In process costing systems, production costs are not traced to individual units of output. Costs are assigned first to production departments. Then assign the costs to units of output as they move through the departments.

Detailed explanation-2: -In a process cost system, each department accumulates its costs to compute the value of work in process inventory, so there will be a work in process inventory for each manufacturing or production department as well as an inventory cost for finished goods inventory.

Detailed explanation-3: -Question: A process costing system1 is used by companies that produce similar or identical units of product in batches employing a consistent process. Examples of companies that use process costing include Chevron Corporation (petroleum products), the Wrigley Company (chewing gum), and Pittsburgh Paints (paint).

Detailed explanation-4: -Credit to Manufacturing Overhead; When manufacturing overhead is applied to production, Work in Process Inventory is debited and the Manufacturing Overhead account is credited.