Question

Which of the following production characteristics is better suited for process costing and not job order costing? Each product batch is distinguishable from the prior batch. The costs are easily traced to a specific product. Costs are accumulated by department. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process.

Answer 1

Costs are accumulated by department

Step-by-step explanation:

Some times, products are manufactured in batches in a manufacturing company. This method of production is synonymous with process costing. Process costing is a standardized production process through which products that are identical are manufactured. The costs expended( direct material cost, direct labor cost and manufacturing overhead) in the production of goods in process costing are not identifiable with a specific unit unlike job order costing.

In process costing, costs are accumulated by each department including the number of units produced. Example of products involved in process costing is making of chairs; chairs that involves batch production instead of customized ones.