A company should use process costing, rather than job order costing, if:

a. the product is manufactured in batches only as orders are received

b. production is only partially completed during the accounting period

c. the product goes through several steps of production

d. the product is composed of mass-produced homogeneous units

Question

Business

Nutmeg

16 March, 00:21

A company should use process costing, rather than job order costing, if:

a. the product is manufactured in batches only as orders are received

b. production is only partially completed during the accounting period

c. the product goes through several steps of production

d. the product is composed of mass-produced homogeneous units

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Answers (1)

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Julian Williams · Answer 1

The product is composed of mass produced homogenous units.

Explanation:

Process costing is utilized when there is a large production of products that have similar features. In process costing the cost of each product produces is equivalent to the cost of other products. Example of products that undergo process costing include:chemicals, processed foods, textiles, paper, oil refinery, soap.

In process costing, the finished product gotten from each stage becomes the raw material of the next stage till the last stage of completion.

The production of product in process costing is continuous and the final product derived from the production process is as a result of a sequence of processes.