Final answer:
The correct answer to the question of keeping separate work in process accounts in process costing is option c, processing department. This allows for accurate tracking of costs associated with each stage of the manufacturing process.
Step-by-step explanation:
The correct answer is option c, processing department. In process costing, work in process (WIP) accounts are maintained for each processing department rather than for individual orders or cost categories. This is because process costing is typically applied in industries where products are uniform and go through a continuous flow or a series of processes. Each processing department may have different costs associated with it based on the nature of the work being conducted there; hence, separate WIP accounts enable the business to accurately track and apply costs.
For example, in a manufacturing company that produces paint, there might be one WIP account for the Mixing department and another for the Packaging department, each capturing the costs relevant to the operations at each stage of production.
In process costing, a separate work in process account is kept for each processing department. This is because process costing is used to determine the cost of production for each department in a manufacturing process.
For example, let's say a company has three processing departments: A, B, and C. Each department has its own work in process account to keep track of the costs incurred in that department. This allows the company to allocate costs accurately and determine the cost of production in each department.