COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The manufacturing cost elements included.
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The time period each covers.
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The detail at which costs are calculated.
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The number of work in process inventory accounts.
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Detailed explanation-1: -Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process.
Detailed explanation-2: -Job order costing typically requires more record keeping than process costing because businesses that use job order costing record materials and other resources for each item of a job. However, in process costing systems, each process or production department has an inventory account, and they aggregate costs.
Detailed explanation-3: -Choosing Between Process Costing and Job Order Costing The system a company uses depends on the nature of the product the company manufactures. Companies that mass produce a product allocate the costs to each department and use process costing.
Detailed explanation-4: -In summary, the basic characteristics of job order costing are: (a) Comprises of products or services that are different from each other. (b) Costs are pooled according to the job. (c) Unit cost is calculated by dividing the total job cost with the unit produced for that particular job.