COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In process costing systems, costs are accumulated but not assigned.
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A process costing system has one work in process inventory account for each process.
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In process costing systems, costs are summarized on job cost sheets.
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Unit costs are not computed in process costing systems.
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Detailed explanation-1: -The correct answer is b. A process cost system has one work in process account for each department. Process cost system has multiple departments or processes, so its work in process inventory account has the same number of processes or departments in order to accumulate the product costs incurred for each process.
Detailed explanation-2: -Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.
Detailed explanation-3: -A process cost system has one work in process account for each process. The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department.
Detailed explanation-4: -Answer: Paint manufacturer, Yacht builder and soft drink bottler companies are most likely to use the process costing system.
Detailed explanation-5: -Which of the following statements describes an element of process costing systems? Total conversion costs include direct labor and manufacturing overhead costs included in beginning inventory and added to production during the period.