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

Which of the following is the most appropriate statement about the nature of batch costing?

In batch costing the whole batch is the cost unit, and the cost per unit is the total batch cost divided by the number of units in that batch. It is not costed unit by unit like job costing, nor averaged over continuous output like process costing.

  1. AA batch is treated as a single cost unit, and the cost per unit is found by dividing the total batch cost by the number of units in the batchCorrect
  2. BEach unit in a batch is costed separately because every unit is made to a different customer specification
  3. CCosts are accumulated for each department for a period and averaged over the continuous output of that period
  4. DCosts are collected only for the sale of goods, and no cost is ascertained for production

Explanation

In batch costing a group of identical units is produced together and the batch is the cost unit. Total batch cost is divided by units in the batch to get unit cost. Option B describes job costing, and option C describes process costing.

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