Question

Which of the following statements best defines cost accumulation?

a. It is the determination of the dollar amounts of direct materials, direct labor, and overhead used in production.
b. It is the association of production costs with the units produced.
c. It is the process of reducing business expenses to increase profits.
d. It is the recognition and recording of costs in the course of business operations.

Answer 1

The following statements best defines cost accumulation b) It is the association of production costs with the units produced.

Step-by-step explanation:

Cost accumulation is a fundamental concept in cost accounting, where the goal is to track and accumulate all the costs associated with the production of goods or services. The phrase "association of production costs with the units produced" highlights the key aspect of linking costs directly to the units of output.

In manufacturing or service-oriented processes, various costs are incurred in the production of each unit. These costs include direct materials, direct labor, and overhead costs. Cost accumulation involves systematically attributing these costs to the specific units they are associated with.

This process is crucial for businesses to determine the total production cost per unit, aiding in decision-making, pricing strategies, and overall financial management. By associating costs with the units produced, organizations gain insights into the cost structure of their products or services, facilitating more informed business decisions.

The following statements best defines cost accumulation b) It is the association of production costs with the units produced.