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CMA Intermediate · Cost Accounting · Process Costing

In process costing, the cost per unit of a process is generally determined by:

Unit cost in process costing is found by dividing the period's total process cost by the equivalent units produced. Costs are averaged across homogeneous output. Accumulating cost per customer order is a feature of job costing, not process costing.

  1. AAccumulating cost against each customer order separately
  2. BDividing the total process cost of a period by the equivalent output of that periodCorrect
  3. CAdding a fixed percentage of profit to prime cost
  4. DUsing the cost of the last batch completed

Explanation

Process costing averages costs: total costs of the process for the period (adjusted for normal loss and scrap value) are divided by the output, expressed in equivalent units where there is work-in-progress. Order-wise accumulation is job costing, so the first option is wrong.

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