Which of the Following Statements Best Defines an Operation Costing

question 72

Multiple Choice

Which of the following statements best defines an operation costing system?

• A) It is identical to a process costing system except that actual manufacturing overhead costs are traced to units of product.
• B) It is the same as a process costing system except that direct materials costs are accounted for in the same way as in job-order costing system.
• C) It is the same as a job-order costing system except that direct materials costs are accounted for in the same way as in a process costing system.
• D) It is identical to a job-order costing system except that actual manufacturing overhead costs are traced to units of product.

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Definitions:

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from the net sales, representing the profit from sales before deducting operating expenses.

LIFO

An inventory valuation method that assumes the last items placed in inventory are the first ones sold, standing for Last In, First Out.

Periodic Inventory System

An accounting method where inventory is physically counted at specific intervals to determine the cost of goods sold.

Cost Of Goods Sold

Expenses directly related to the manufacturing of products a company sells, such as raw materials and labor costs.