Which of the following entities would probably use a process costing system?
A) A custom boat builder
B) A custom furniture manufacturer
C) A one of a kind jewelry creator
D) An oil refinery.

Question

Quizplus · Accepted Answer

An oil refinery would likely use a process costing system as it involves the continuous production of identical units of product (i.e. refined oil) using a standardized production process. Process costing is designed to calculate the average cost per unit of product within a large batch or continuous production system. Conversely, the other entities listed (custom boat builder, custom furniture manufacturer, and one of a kind jewelry creator) would be more likely to use a job costing system as they produce unique or custom-made products that require individualized tracking of costs.

Which of the Following Entities Would Probably Use a Process