When should process costing techniques be used in assigning costs to products?
A) when the product is unique and made to order
B) when the product is manufactured according to customer specifications
C) when the product is composed of mass-produced homogeneous products
D) any time production is only partially completed during the accounting period

Question

Quizplus · Accepted Answer

Process costing techniques are most suitable when the product is composed of mass-produced homogeneous products. This means that the product is similar in nature and produced in large quantities through a repetitive process. Some examples of industries that use process costing include oil refineries, chemical manufacturing, and food processing. Process costing allows for the allocation of costs to each unit produced based on the average cost of the entire production run. This method is efficient because it simplifies the costing process and provides a reasonable cost estimate for each unit of production. Process costing may not be appropriate for unique products or those that are made-to-order, as the costs of production may vary significantly from one unit to the next.

When Should Process Costing Techniques Be Used in Assigning Costs