CMA Intermediate · Cost Accounting · Batch Costing
Which of the following best describes a batch in batch costing?
A batch is a group of identical or similar units produced together and treated as a single cost unit. Costs are collected for the whole batch and divided by the units produced to find cost per unit, which distinguishes batch costing from process and contract costing.
- AA group of identical or similar units produced together, treated as one cost unit for cost accumulationCorrect
- BA single customer-specified order executed at the customer's site
- CA continuous flow of production where costs are averaged over equivalent units
- DA fixed time period for which costs are accumulated across all products
Explanation
In batch costing, a lot of similar products is produced together and the batch is the cost unit. Cost is accumulated for the whole batch and divided by the number of good units to get unit cost. Process costing averages costs over continuous flow, and a customer-site order is closer to contract costing.
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