A company that applies process costing is most frequently characterized by:
A) Low standardization and high production volume.
B) Repetitive production and low production volume.
C) Similar products and high production volume.
D) Repetitive production and unique products.
E) Custom orders and mass production.

Question

Quizplus · Accepted Answer

Process costing is typically used in situations where there is high production volume and similar products being produced. This allows for the costs of each product to be averaged over the entire production run, resulting in a per-unit cost that is representative of the cost to produce each item in the batch. Low standardization, unique products, or custom orders would typically require a job costing approach rather than a process costing approach.

A Company That Applies Process Costing Is Most Frequently Characterized