Which of the following types of companies would typically use process costing rather than job-order costing?
A) A small appliance repair shop.
B) A manufacturer of commercial passenger aircraft.
C) A specialty equipment manufacturer.
D) A breakfast cereal manufacturer.

Question

Quizplus · Accepted Answer

Process costing is used when a company produces large quantities of identical products in a continuous process, such as a breakfast cereal manufacturer. Job-order costing, on the other hand, is used when a company produces customized products or services, such as a small appliance repair shop. Commercial aircraft manufacturers would likely use a combination of both, as they may have standardized components that use process costing, but also customized features that use job-order costing. Specialty equipment manufacturers could go either way depending on their production processes, so it is not a definitive option.

Which of the Following Types of Companies Would Typically Use