00:01
In this question we have been asked which of the given is a characteristic of process costing.
00:09
So what is process costing? well, it is a method of accounting used to track costs.
00:18
Track costs for large quantities of identical or similar products as they move through different stages of production.
00:32
It assigns cost to each manufacturing department or process stage and this allows for the calculation of the cost.
00:37
Per unit at each state.
00:40
So let's consider our options.
00:43
Well we have been given a total of four options.
00:50
So consider the first option.
00:52
The first option says that it uses only one work in process account.
00:56
Now this is incorrect and this is because usually each production department or stage within the process maintains its own separate work in process inventory account.
01:07
And the next one is it is best suited for industries that manufacture custom goods.
01:14
This is incorrect.
01:16
And process costing is ideal for mass production of standardized goods...