When should process costing techniques be used in assigning costs to products?
A)In situations where standard costing techniques should not be used
B)If products manufactured are substantially identical
C)When production is only partially completed during the accounting period
D)If products are manufactured on the basis of each order received

Question

Quizplus · Accepted Answer

Process costing techniques should be used in assigning costs to products when products manufactured are substantially identical. This is because process costing assumes that all units produced within a specific period are homogenous and assigns costs evenly across all units produced during that period. This is useful for industries such as oil refining or food processing, where all units produced during the period are very similar in terms of inputs and production processes. If products are not substantially identical or if production is done on the basis of each order received, other costing techniques such as job costing or activity-based costing should be used.

When Should Process Costing Techniques Be Used in Assigning Costs