Which of the Following Is Unique to a Process Costing

question 103

Multiple Choice

Which of the following is unique to a process costing system?

• A) Each process has its own WIP account.
• B) Direct materials, direct labour and manufacturing overhead are assigned to the first department only.
• C) Costs for each process stay with that process until the goods are moved to finished goods.
• D) Work is not started on a product until an order is received.

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Definitions:

Contribution Margin Ratio

The contribution margin ratio is a financial metric indicating the proportion of sales revenue that exceeds variable costs and is available to cover fixed costs and generate profit.

Fixed Costs

Outlays for rent, salaries, and insurance that are unaffected by variations in the volume of production or sales.

Sales Dollars

A term referring to the total revenue generated from the sale of goods or services, expressed in monetary value.

High-Low Method

A method employed in cost accounting that calculates estimated variable and fixed costs using the highest and lowest activity levels.