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

Which of the following is the most appropriate costing method for an industry that produces identical units, such as bricks, cement or paper, where output is continuous and uniform and costs are compiled for a period?

Unit costing (single or output costing) is appropriate because the products are identical and produced continuously. Costs are accumulated for a period and divided by the output units. Job, batch and contract costing apply to orders or groups of items rather than uniform continuous production.

  1. AUnit costing (single or output costing)Correct
  2. BJob costing
  3. CBatch costing
  4. DContract costing

Explanation

Unit costing is used where products are identical and made continuously, with costs collected for a period and divided by units produced. Job and contract costing suit products made to customer order, and batch costing suits groups of similar items made together.

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