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CA Intermediate · Cost and Management Accounting · Job Costing

Which statement about work-in-progress and job costing is correct?

Under job costing, the cost of each job is accumulated on its own job cost sheet until completion. The method suits customer-specific work, not continuous mass production of identical units, and overheads are absorbed during the job rather than after sale.

  1. AUnder job costing, the cost of each job is accumulated on a job cost sheet until the job is completedCorrect
  2. BJob costing is suitable for continuous mass production of identical units
  3. CJob cost sheets are closed at the end of every financial year regardless of completion
  4. DOverheads in job costing are never absorbed until the job is sold

Explanation

Job costing accumulates direct and absorbed indirect costs for each customer-specific job on a job cost sheet until completion. Mass production of identical units suits process or unit costing, so the second option is wrong.

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