Question

Which of the following is an assumption made under the process-costing method?

a. There is a one-to-one relationship between the output measures of a transferring department and a receiving department.
b. There is no beginning work in process at the end of are porting period.
c. All the goods in ending work in process are considered complete in all respects.
d. There is no physical movement of goods from the transferring department to the receiving department.

Answer 1

In process costing, the assumption that there's a one-to-one relationship between the output measures of a transferring and receiving department is important for accurate cost allocation.

Step-by-step explanation:

In the context of process costing, an important assumption often made is: a. There is a one-to-one relationship between the output measures of a transferring department and a receiving department. This assumption simplifies the process of allocating costs between departments and helps ensure accurate cost measurement across different stages of production. It does not assume that there is no beginning work in process at the end of a reporting period (b), nor does it consider all goods in ending work in process as complete in all respects (c). Additionally, it does not assume that there is no physical movement of goods from the transferring department to the receiving department (d). Process costing is typically used in industries where production is continuous and the products are indistinguishable from each other, such as in chemical manufacturing or oil refining.