When should process costing techniques be used in assigning costs to products?
A) If the firm manufactures heterogeneous products
B) If the products are repetitively produced
C) If the products are manufactured according to customer specifications
D) All of these

Question

Quizplus · Accepted Answer

Process costing techniques are best suited for industries that produce homogeneous or repetitive products, where the units produced are identical or nearly identical. This is because the costs can be reasonably allocated to each unit based on the total costs for the production run. If the products are heterogeneous, meaning they are not similar enough to use the same costing methods, then process costing may not be appropriate. Custom or made-to-order goods would also not be appropriate for process costing as there is no repetitive production line to allocate costs to.

When Should Process Costing Techniques Be Used in Assigning Costs