ECONOMICS

Detailed explanation-1: -Process costing is not applicable to heterogeneous products because they are unique products. Examples are yachts and hand-made products. In this kind of product, job order costing is appropriate to be used as costing method.

Detailed explanation-2: -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-3: -Process costing is a method of costing used mainly in manufacturing where units are continuously mass-produced through one or more processes. Examples of this include the manufacture of erasers, chemicals or processed food.

Detailed explanation-4: -Process-costing would be most likely used by a firm that produces heterogeneous products. Process-costing is used by firms with homogenous products, not heterogeneous products. In a process-costing system, material costs and conversion costs are incurred simultaneously.

Detailed explanation-5: -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.