Process costing provides a system of costing where the following characteristics occur. Identify which of the following are correct:

Related MCQs

• A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.
• Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.
• Identify the circumstances where under- or over-recovery of overhead will occur:
• If it is assumed that all losses in process occur at the end of the process, units of abnormal loss are costed in exactly the same way in the as units of finished output.
• Job costing is a costing method applied where work is undertaken to customers’ special requirements and each order is of comparatively short duration.
• Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.
• The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.
• Identify the characteristics of services: I. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen. II. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created. III. Variability: Services face the problem of maintaining consistency in the standard of output. IV. Perishability: Services cannot be stored. V. Lack of ownership: Services do not result in the transfer of property in anything.
• Identify the types of specific order costing.
• In process costing each process is treated as a separate………………