Identify which one of the following statements regarding process costing is true.
A)Process-costing systems are usually simpler than job-order costing systems.
B)Individual jobs exist in process costing.
C)The process-costing approach does not distinguish among individual units of product.
D)The unit cost for inventory purposes is calculated by accumulating the costs of all processing departments and dividing the total costs by the number of units produced.

Question

Quizplus · Accepted Answer

Process costing does not distinguish between individual units of product. Instead, it assigns costs to each production process or department, and then spreads those costs evenly across all units produced. Option A is incorrect because process costing can be just as complex as job-order costing depending on the number of processes involved. Option B is incorrect because process costing deals with mass-produced goods, not individual jobs. Option D is partly correct but not the best answer because the unit cost is calculated by dividing the total costs by the total number of units produced, not just the number of units produced in a particular department.

Identify Which One of the Following Statements Regarding Process Costing