Which of the following is applicable to both a job order cost system and a process cost system’?

Which of the following is applicable to both a job order cost system and a process cost system’?
A . Total manufacturing costs are determined at the end of each period.
B . Costs are summarized in a production cost report for each department
C . Three manufacturing cost elements are tracked: direct materials, direct labor, and manufacturing overhead.
D . The unit cost can be calculated by dividing the total manufacturing costs for the period by the units produced during the period.

View Answer

Answer: C

Explanation:

Both job order cost systems and process cost systems track three manufacturing cost elements: direct materials, direct labor, and manufacturing overhead. These cost elements are essential in calculating the total production cost and determining the cost per unit.

Direct Materials: The raw materials directly used in the production of goods.

Direct Labor: The wages of workers who are directly involved in manufacturing the products.

Manufacturing Overhead: Indirect costs associated with production, such as utilities, maintenance, and depreciation of equipment.

Reference: "Cost Accounting: A Managerial Emphasis," which details the tracking of manufacturing costs in different costing systems.