Process costing is most appropriate when a business produces:
Correct answer: D. Identical units through continuous operations
- A. Unique buildings under separate contracts
- B. Customized machines for individual customers
- C. Consulting assignments with separate budgets
- D. Identical units through continuous operations
Explanation
Process costing collects costs by department or process and averages them over large quantities of similar units. Separate contracts or customized assignments normally require job or contract costing.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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