alleryStart learning →Process costing is used for which kind of manufacturing?
ACustom orders that differ from each other
BLarge quantities of identical items in flow
CSmall batches finished at a single station
DServices billed to individual customers
Answer & Solution
Correct answer: B. Large quantities of identical items in flow
1. Process costing suits large quantities of identical items manufactured in a continuous flow.
2. The flow runs on a first in, first out basis, so the first batch started is the first completed.
3. Breakfast cereal, phones and cars are the kinds of products costed this way.
4. Orders that differ from one another are unique, and unique work is costed by job order costing instead.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 3.1 Introduction_
Keep practising Process Costing
Browse all Process Costing questions for US CMA Part 1, or explore more Management Accounting topics.
Related questions
Eight one gallon buckets are left outside in the rain and each ends up three quarters fullMaterials costing $599,427 were added in May for the 44,700 units started that month. WhatIn process costing, the costs of a manufactured item are grouped into which two categoriesHow is a batch defined in a process costing system?Job order or process costing?Match the stage to what happens thereComplete the equivalent unit countWhich amount is bigger?