CMA Intermediate · Cost Accounting · Batch Costing
Which statement about the features of batch costing is correct?
Batch costing is a form of specific order costing in which each batch is given a number and its cost is ascertained separately on a batch cost sheet. Period averaging is a process costing feature, so that statement does not describe batch costing.
- AIt is a form of specific order costing where the cost of each batch is ascertained separatelyCorrect
- BCosts are averaged for the whole period and not for individual lots
- CIt applies only when each unit is different from every other unit
- DBatch cost sheets are not required since work in progress is not identifiable
Explanation
Batch costing is a type of specific order costing: each batch has its own batch number and cost sheet, so cost and WIP are identifiable by batch. Period averaging belongs to process costing. Identical units within a batch are the norm.
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