A process costing system differs from a job order costing system in that:
A) There is no need for overhead application rates in process costing systems.
B) Process costing systems are used primarily in service industries, whereas job order costing systems are used in manufacturing operations.
C) Per-unit costs are not computed in process costing systems.
D) Process costing systems are used when production involves large volumes of standardized products, whereas job costing systems are used when each job or batch of products is uniquely different.

Question

Quizplus · Accepted Answer

The statement "Process costing systems are used when production involves large volumes of standardized products, whereas job costing systems are used when each job or batch of products is uniquely different" is correct. In process costing systems, the cost per unit is usually computed, as the costs are accumulated and averaged over the entire production process. Overhead application rates are still needed in process costing systems. Job order costing is often used in manufacturing operations where each job or batch of products is uniquely different. Process costing may be used in service industries but is not limited to them.

A Process Costing System Differs from a Job Order Costing