Process Costing Quiz

Questions and Answers

Assigning total costs to identical or similar units of output

Process-costing system

Job-costing involves distinct, identifiable units; process-costing involves masses of identical units

To address the need for more accurate cost allocation in complex production processes Signup and view all the answers

Calculating equivalent units Signup and view all the answers

Assigning total costs to many identical or similar units of output Signup and view all the answers

For masses of identical or similar units of a product or service Signup and view all the answers

By dividing total costs incurred by the number of units of output Signup and view all the answers

Food and chemical processing Signup and view all the answers

Job-costing focuses on distinct units, while process-costing focuses on masses of identical units Signup and view all the answers

Study Notes

Unit costs are obtained by dividing the total cost of a department or process by the number of units produced.
Process costing is suitable for masses of identical or similar units of a product or service.
The key difference between job-costing and process-costing systems is that job costing is used for unique or customized products, while process costing is used for mass-produced products.
Hybrid costing systems, such as operation costing, are used to combine the benefits of job and process costing.
Operation costing is used to provide a more detailed and accurate costing of products or services that have some unique features, but are also mass-produced.
The main focus of process costing is to compute the unit cost of a product or service by spreading the total cost of a department or process over the number of units produced.
Process-costing system is most appropriate when a company produces a large quantity of identical or similar products.
Unit costs are computed in process costing by dividing the total cost of a department or process by the number of units produced.
An example of a product or service suitable for process-costing systems is a manufacturing company that produces thousands of units of a single product, such as soft drinks or cosmetics.