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CA Intermediate · Cost and Management Accounting · Unit & Batch Costing

Which of the following is a feature of batch costing as taught in Cost and Management Accounting?

In batch costing the whole batch is the cost unit. Total cost of the batch is accumulated and divided by the number of units in it to give cost per unit. Individual unit costing is job costing, and continuous flow is process costing.

  1. AThe batch is treated as a cost unit, and the cost per unit is found by dividing the total batch cost by the number of units in the batchCorrect
  2. BCosts are accumulated for each individual unit and never averaged across units
  3. CCosts are collected for a continuous flow of identical output with no separate order identity
  4. DCosts are accumulated only for a contract at a site extending over several years

Explanation

In batch costing a batch of identical units is treated as one cost unit, so the total batch cost is divided by the batch quantity to get the cost per unit. Option B describes job costing, option C process costing and option D contract costing.

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