In a process costing system, production costs are:
A)adjusted and allocated by jobs.
B)not inventoried.
C)directly shown on the income statement.
D)accumulated by departments.

Question

Quizplus · Accepted Answer

In a process costing system, production costs are accumulated by departments. This is because in a process costing system, the production process involves a series of continuous processes or stages, and the costs are incurred by each department involved in the process. These costs are then accumulated by the department and allocated to the products produced in that department. Therefore, option D is the correct answer. Option A is incorrect because production costs are not allocated by jobs in a process costing system, but are rather accumulated by departments. Option B is incorrect because production costs are inventoried in a process costing system, as they are used to determine the cost of goods completed and transferred out of each department. Option C is also incorrect because production costs are not directly shown on the income statement, but are rather allocated to the cost of goods sold account.

In a Process Costing System, Production Costs Are