ECONOMICS

Detailed explanation-1: -The process costing method is typically used for processes that produce large quantities of homogeneous products. The process costing method is in contrast to other costing methods, such as product costing, job costing, or operation costing systems. Using the process costing method is optimal under certain conditions.

Detailed explanation-2: -If the company is producing homogeneous products, it can use the process costing method for averaging costs because the process costing system averages the cost of a product while it passes through different processes.

Detailed explanation-3: -Total product costs can be determined by adding together the total direct materials and labor costs as well as the total manufacturing overhead costs.

Detailed explanation-4: -A process costing system is used where a single, homogeneous product or service is produced. In a process costing system, total manufacturing costs are divided by total number of units produced during a given period. The unit cost that results is a broad, average figure.