A process costing system accounts for product costs
A)for a specific period of time.
B)always in a single Work in Process Inventory account.
C)without regard to the process that created the cost.
D)for specific orders.

Question

Quizplus · Accepted Answer

A process costing system accounts for product costs for a specific period of time, usually a month or a year, by dividing the total production cost by the number of units produced. The cost flows through multiple accounts, including the beginning and ending Work in Process Inventory, and the Finished Goods Inventory accounts. The cost is assigned to each unit of product based on the average cost incurred during the period. The system is suitable for firms that produce large quantities of homogeneous products, such as chemicals, steel, or paper.

A Process Costing System Accounts for Product Costs