Question

Which of the following costs will not be part of product cost when using a process...

Which of the following costs will not be part of product cost when using a process costing system?

a. Prior department cost

b. Conversion cost

c. Byproduct cost

d. Material cost

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Answer #1

Under process Costing, Materials are added and converted or processed to give a product. In order to process, it is required to incur some costs called Conversion Costs like Direct Labor and Overhead Costs. In the process, it may lead to produce a byproduct, whose cost is also a part of product cost under process costing.

Hence, Conversion Cost, Byproduct Cost and Material Cost are all part of product cost under process costing except prior department cost.

Correct Option is a) Prior Department Cost

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