Process costing techniques should be used in assigning costs to products

Question

Quizplus · Accepted Answer

Process costing is most appropriate for products that are composed of mass-produced homogeneous units. This is because process costing assigns average costs to each unit of product, assuming that each unit is identical in terms of production costs. This method is not suitable for products that are manufactured on the basis of each order received (option A), because the costs would vary from order to order. Partially completed production (option B) could use either process or job costing techniques depending on the nature of the production process. Lastly, standard-costing techniques (option D) can still be used in conjunction with process costing techniques.

Process Costing Techniques Should Be Used in Assigning Costs to Products