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Consider the following statements:
(i) Job costing is only applicable to service organisations.
(ii) Batch costing can be used when a number of identical products are manufactured together to go into finished inventory.
Is each statement TRUE or FALSE?
Statement (i)
Statement (ii)Statement 1 is false. Statement 2 is true.
Tutor, batch costing is used where identifiable batches are made. Each batch has identical units.
Process costing is used when unit travels from different processes and has identical nature in units so better option would have been process costing. Can you explain me how it is doing it true?Statement (ii) makes no mention of units travelling from different processes.
An example of batch costing is making bread. If each time they bake bread they always bake a batch of 100 at the same time (rather than bake each loaf of bread separately) then they will calculate the cost baking one batch (and then divide by 100 to get the cost of each loaf of bread).
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