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- 1 Marks
Question
There are common features in most process costing systems. Which of the following is NOT one of the common features? A. Clearly defined process cost centres and the accumulation of all costs
B. Maintenance of accurate records of units and part units produced and the cost incurred by each process
C. Averaging of the prime costs of each process over the total production of that process, excluding partly completed units
D. Charging of the cost of the input of one process as the raw materials input of the following process
E. Clearly defined procedures for separating costs where the process produces two or more products
Answer
Answer: C. Averaging of the prime costs of each process over the total production of that process, excluding partly completed units
Explanation: In process costing, the prime costs are typically averaged over both completed and partly completed units to ensure accurate cost allocation. Excluding partly completed units from the calculation would result in an inaccurate distribution of costs, making option C incorrect. The other options reflect standard practices in process costing, such as using clearly defined cost centres and charging costs from one process to the next.
- Tags: Common Features, Cost Accumulation, Prime Costs, Process Costing
- Level: Level 1
- Topic: Costing Methods
- Series: MAY 2024
- Uploader: Dotse