Process Cost System - Chapter 16 . Illustration 15-2...

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PROCESS COST SYSTEM A company uses a  process cost system  when it manufactures a large volume of similar products.  Production is continuous. Examples of a process cost system are the manufacture of cereal by  Kellogg , the refining of petroleum by  ExxonMobil , and the production of automobiles by  General  Motors . Process costing accumulates product-related costs  for a period of time  (such as a week or a  month) instead of assigning costs to specific products or job orders. In process costing, companies  assign the costs to departments or processes for the specified period of time. Illustration  15-2  shows  examples of the use of a process cost system. We will discuss the process cost system further in 
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Unformatted text preview: Chapter 16 . Illustration 15-2 Process cost system Can a company use both types of cost systems? Yes. For example, General Motors uses process cost accounting for its standard model cars, such as Saturns and Corvettes, and job order cost accounting for a custom-made limousine for the President of the United States. The objective of both cost accounting systems is to provide unit cost information for product pricing, cost control, inventory valuation, and financial statement presentation....
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Process Cost System - Chapter 16 . Illustration 15-2...

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