Chapter 5 Process Costing

Job-order costing and process costing systems both provide a mechanism for computing unit product costs

False Job-Order costing may but process costing systems compute it by DEPARTMENT not unit.

Process costing systems accumulate costs by customer order rather than by department.

False Process costing accumulate costs by their different departments, materials, labor, overhead.

processing departments, all have two essential features.

First, the activity in the processing department is performed uniformly on all of the units passing through it. Second, the output of the processing department is homogeneous; in other words, all of the units produced are identical.

is used when many different jobs or products are worked on each period.

JOB-ORDER COSTING

is used most commonly in industries that convert raw materials into homogeneous (i.e., uniform) products, such as bricks, soda, or paper, on a continuous basis.

Process costing (A costing method used when essentially homogeneous products are produced on a continuous basis.)

Process costing is used when a company produces a continuous flow of units that are indistinguishable from one another.

True Yes they produce many of the same things all identical. eg. Potato chips, pizza boxes, soda company., oreos, candy.

Job-order costing and process costing systems both use the same basic manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods.

True yes I believe they do but in a process costing system each department has a separate Work in Process Account.

Activity-based costing uses a larger variety of............... ............. to assign overhead costs to products than conventional approaches.

allocation bases

process cost accumulates cost by................. and is used for............ products.

department, indistinguishable

labor costs are traced to ............................... NOT individual jobs.

departments

Examples of industries that use.................. ................. include furniture manufacturing, special-order printing, shipbuilding, and many types of service organizations.

job-order costing

PROCESS COSTING is an important alternative to......... ..........

job-order costing

a processing department is an organization unit, where work is performed on a .............. and materials, labor and overhead are added.

product

Cost accumulation is............... in a process costing system than in a job-order costing system

simpler