Concept explainers
To identify: The false statement about
Answer to Problem 1QC
Option c. It accumulates production cost by activities is the false statement about process costing.
Explanation of Solution
a.
It is well suited for the company whose products are indistinguishable from each other: This option is not correct because this statement defines process costing. The process costing is applied for mass production of identical products.
b.
It uses multiple WIP accounts, one for each processing department: This option is incorrect because this statement also defines process costing. In this type, direct material, direct labor & manufacturing
c.
It accumulates production cost by activities: This is the correct option because the production cost of activities is defined as
d.
It transfers cost from one processing department to the next: The transfer cost from one processing department to the next is defined as the process costing. E.g. In manufacturing of a particular product, the product needs to go through Center process, Shell process & packaging process to make available to the consumer. So each department incurs a cost, this is costs called as process costing. Thus, the statement is not false about process costing and the said option is incorrect.
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Chapter 5 Solutions
Managerial Accounting (4th Edition)
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