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ACCA Applied Knowledge · Management Accounting · Cost accounting methods

Batch costing is most appropriate in which of the following situations?

Batch costing suits a bakery producing groups of identical loaves, because each group is processed together and treated as a single cost unit. Single custom vessels suit job costing, continuous water supply suits process costing, and consultancy hours suit service costing.

  1. AA bakery producing 50 loaves of one type then 80 of another, each group handled together through the processCorrect
  2. BA shipbuilder producing a single vessel to a customer's specification
  3. CA water company supplying a continuous flow of treated water
  4. DA consultancy charging clients for hours worked

Explanation

Batch costing applies where identical units are produced in groups, with each group treated as a cost unit. A single vessel suits job costing, continuous flow suits process costing, and consultancy suits service costing.

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