A Process Costing System Differs from a Job Order Costing

question 19

Multiple Choice

A process costing system differs from a job order costing system in that:

• A) There is no need for overhead application rates in process costing systems.
• B) Process costing systems are used primarily in service industries, whereas job order costing systems are used in manufacturing operations.
• C) Per-unit costs are not computed in process costing systems.
• D) Process costing systems are used when production involves large volumes of standardized products, whereas job costing systems are used when each job or batch of products is uniquely different.

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Definitions:

Unit Product Costs

The total expense incurred to create a product divided by the number of units produced, encompassing both direct and indirect costs.

Machine-Hour

A unit of measure representing the operation of a machine for one hour, used in allocating manufacturing overhead costs to products.

Selling Price

The amount of money a customer pays to buy a product or service, determined by various factors including cost, market demand, and competition.

Unit Product Costs

The combined expenses of direct materials, direct labor, and manufacturing overhead incurred in the production of a single product unit.