A costing system that determines an average cost for all units of product in a particular time period is:
A) Job costing system
B) Batch costing system
C) Process costing system
D) Direct costing system

Question

Quizplus · Accepted Answer

A process costing system is used when a large quantity of identical products are produced through a continuous process. The cost of each unit is determined by dividing the total cost of production by the total number of units produced. This results in an average cost per unit. Job costing is used when each product is unique and requires different materials and labor costs. Batch costing is similar to job costing, but involves producing a specific quantity of a product at a time. Direct costing is focused on identifying the direct costs of producing each unit, rather than using an average cost per unit.

A Costing System That Determines an Average Cost for All