CA Intermediate · Cost and Management Accounting · Unit & Batch Costing
Which of the following statements about batch costing is correct?
In batch costing the whole batch is the cost unit, so total batch cost is accumulated and divided by the number of units in the batch to get cost per unit. Each unit is not costed separately, and set-up costs are spread over the batch.
- AThe batch is treated as a cost unit, and cost per unit is found by dividing the total batch cost by the number of units in the batchCorrect
- BBatch costing is used only when a single continuous product is made for stock
- CBatch costing treats each individual unit within a batch as a separate job with its own cost sheet
- DSet-up costs in batch costing are charged to the first unit of the batch only
Explanation
In batch costing a batch of identical units is the cost unit. Costs are accumulated for the whole batch and divided by the batch quantity. Treating each unit as its own job is job costing, so option C is wrong.
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