In which of the following situations should a company use process costing rather than job order costing?
A)If the product cost is accumulated in a single Work in Process Inventory account
B)If the product is produced based on individual customer specifications
C)If the product is composed of mass-produced homogeneous units
D)If the product goes through a single stage of production

Question

Quizplus · Accepted Answer

Process costing is best used when producing mass-produced homogeneous units because the cost of each unit is the same and the total cost can be evenly spread out over the number of units produced. Job order costing is used for customized or unique products where each product has its own distinct cost. A, B, and D all describe situations where job order costing would be more appropriate.

In Which of the Following Situations Should a Company Use