COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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service industries only
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industries where different types of products are manufactured
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industries where homogeneous products are manufactured on continuous basis
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all of the above
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Detailed explanation-1: -Process costing is suitable for industries producing homogeneous products and where production is a continuous flow.
Detailed explanation-2: -A business that produces homogeneous products on a large scale would use process costing to determine the amount of money spent on each individual process over a particular period, while those dealing in unique, heterogeneous wares would use job costing to determine the cost of each individual unit made.
Detailed explanation-3: -Process costing is a costing method that is most suited for homogenous products. Low production volume of products, custom-made, or heterogeneous is mostly suited for job-order costing because it will be easier and better to monitor the cost attributable to each product rather than doing a process costing.
Detailed explanation-4: -Companies that use process costing produce a single product, either on a continuous basis or for long periods. All the products that the company produces under process costing are the same.