COST ACCOUNTING
PROCESS COSTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -Process costing works well whenever relatively homogeneous products pass through a series of processes and receive similar amounts of manufacturing costs. A process is a series of operations performed on the product, such as mixing, molding, or packaging.
Detailed explanation-2: -If the company is producing homogeneous products, it can use the process costing method for averaging costs because the process costing system averages the cost of a product while it passes through different processes.
Detailed explanation-3: -The answer is b. Homogeneous product and high production volume. Process costing is a costing method that is most suited for homogenous products.
Detailed explanation-4: -Process costing is not applicable to heterogeneous products because they are unique products. Examples are yachts and hand-made products. In this kind of product, job order costing is appropriate to be used as costing method.