The appropriate cost accounting system to use when inventory items are produced on an assembly line is
A) job-order costing.
B) process costing.
C) weighted average.
D) perpetual method.

Question

Quizplus · Accepted Answer

Process costing is used when inventory items are produced on an assembly line or in a continuous process within a factory, where the units produced are identical or similar. This method calculates the average cost of each unit produced during a specific accounting period, and thus, it is appropriate for assembly line production. On the other hand, job-order costing is used when products are manufactured on a customized basis, such as in a construction company. Weighted average costing is similar to process costing but includes the cost of all units produced to determine the average cost. The perpetual method is a system used for keeping track of inventory balances in real-time but does not determine the cost of goods sold.

The Appropriate Cost Accounting System to Use When Inventory Items