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How is a batch defined in a process costing system?
AA group of units sold to one buyer
BThe units completed by a department
CMaterials added at the start of production
DThe units finished within one month
Answer & Solution
Correct answer: C. Materials added at the start of production
1. Items enter production in batches rather than individually.
2. A batch is each time a quantity of materials is added to the first point of production to keep the work flowing.
3. A unit is one of the products manufactured within a batch.
4. Costs are eventually averaged over the units produced in the period to give the cost of one item.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 3.1 Introduction_
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