ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Which statement about job costing is correct?
Each job is costed separately, with overheads usually absorbed using a predetermined rate. Job costing also applies to services such as repairs or audits, and jobs are distinct. Averaging costs across all units is characteristic of process costing, not job costing.
- AEach job is costed separately, and overheads are usually absorbed using a predetermined rateCorrect
- BCosts are averaged over all units produced in a period
- CJob costing cannot be used for services such as repairs or audits
- DJob costing requires all jobs to be identical in specification
Explanation
Job costing accumulates direct costs per job and adds overheads through a predetermined absorption rate. It is used in services too, and jobs are distinct, not identical. Averaging costs is process costing.
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