In process costing, the cost per unit is determined by dividing total production costs by:

• A. The number of units produced
• B. The number of departments
• C. The number of orders
• D. The number of workers

Answer: (A)

In process costing, the cost per unit is found by spreading the total production costs of a process over the units actually produced. This means dividing the accumulated costs for that process by the quantity of units produced (or, when needed, by equivalent units if some are not fully complete). Dividing by the number of departments, orders, or workers would not reflect how much product was produced, so those measures don’t give the per-unit cost. The key idea is allocating costs to output, so the denominator should be units produced (adjusted for any partial work if applicable).