Question

Companies that use a process-cost accounting system would:

Answer 1

Answer:

The correct answer is letter "E": establish a separate Work-in-Process Inventory account for each manufacturing department.

Explanation:

Process-cost accounting is an approach used to assign costs of processes per department on direct materials, direct labor, and factory overhead. In such cases, conversion and prime costs are allocated to each department's manufacturing process to value the inventory of final goods.

Thus, the Work-In-Progress (WIP) Inventory is also assigned according to the manufacturing processes of each department.