ECONOMICS

Detailed explanation-1: -Question: In a process cost accounting system, a separate Work in Process Inventory account is maintained for each producing department. a. True.

Detailed explanation-2: -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.

Detailed explanation-3: -A separate Work in Process Inventory account is used in process costing for each major production process. Process costing often combines direct materials and direct labor into a single category called conversion costs.

Detailed explanation-4: -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-5: -The correct answer is b. A process cost system has one work in process account for each department.