A manufacturer of luxury yachts would use which type of costing system?

Question

Quizplus · Accepted Answer

Job costing is the best choice for a manufacturer of luxury yachts because each yacht is a unique project that requires specific, individualized attention and resources. A job costing system allows for the accumulation of costs for each individual yacht, including direct labor, direct materials, and overhead expenses. This provides more accurate and precise cost information for each yacht, which is important for pricing decisions and managing profitability. Process costing, on the other hand, is more appropriate for companies that produce large quantities of similar products, such as soda manufacturers or cereal producers.

A Manufacturer of Luxury Yachts Would Use Which Type of Costing