CA Intermediate · Cost and Management Accounting · Process & Operation Costing
Which of the following is a feature of operation costing rather than process costing?
Operation costing accumulates and averages cost for each standardised operation while tracking material cost by batch. This is its distinguishing feature compared with plain process costing, which averages all costs per process.
- ACosts are accumulated for each operation within a standardised mass production activity, with materials batch-wiseCorrect
- BWork-in-progress is never present
- CNo equivalent units are ever required
- DOutput of one process is always the input of the next
Explanation
Operation costing is a refinement of process costing applied where a series of standardised operations is performed on batches of materials, with material costs tracked batch-wise and conversion cost averaged per operation.
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