In a process cost system, the amount of work in process inventory is valued by:
A) finding the sum of all open job costs
B) allocating departmental costs between completed and partially completed units
C) multiplying units in ending inventory by the direct materials cost per unit
D) all of the above

Question

Quizplus · Accepted Answer

In a process cost system, the work in process inventory is valued by allocating departmental costs between completed and partially completed units. This means that the cost of production is allocated to the unit based on the percentage of completion. Option A is incorrect as it refers to open job costs which are relevant in a job order cost system. Option C is also incorrect as it only considers direct materials but ignores the cost of labor and overheads which are significant in process cost systems.

In a Process Cost System, the Amount of Work in Process