Which of the following statements is true of process costing?
A) It uses one Work-in-Process Inventory account.
B) It tracks and assigns both period costs and product costs to units produced.
C) It accumulates product costs by production departments.
D) It assigns manufacturing overhead costs to products only in the last production process.

Question

Quizplus · Accepted Answer

Process costing accumulates product costs by production department or process, rather than by individual units. Each department or process is assigned its own Work-in-Process Inventory account. Period costs, such as selling and administrative expenses, are not assigned to units but are expensed in the period incurred. Manufacturing overhead costs are allocated to each department or process and then assigned to products based on a predetermined overhead rate.

Which of the Following Statements Is True of Process Costing