Question

Which of the following statements is correct regarding job order and process costing systems?

A. A process cost accounting system is appropriate for similar products that are continuously mass produced.
B. All of the choices are correct.
C. The perpetual inventory method cannot be used in a job order cost system.
D. A job order cost system is most appropriate when a large volume of uniform products are produced.

Answer 1

Answer:

The correct answer is A. A process cost accounting system is appropriate for similar products that are continuously mass produced.

Explanation:

The system of costs by processes is that by which the production costs are charged to the processes, to the accumulated systems of the production costs, by department or by cost center.

This cost system is ideal for companies such as assembly departments. Even in the financial institution where I worked, the process cost system was also used as a method of calculation and cost allocation.