Asked by Caitlin Gamble on Apr 28, 2024
Verified
For which of the following businesses would the process cost system be appropriate?
A) custom cabinet maker
B) landscaper
C) paper mill
D) catering firm
Process Cost System
An accounting system used to track and allocate costs of production in an environment where goods are produced in a continuous process.
Paper Mill
A manufacturing facility where various types of paper are produced through the processing of wood pulp and other raw materials.
- Identify the key distinctions between job order costing and process costing and understand the contexts in which they are best applied.
Verified Answer
VU
Vanessa UrendaMay 01, 2024
Final Answer :
C
Explanation :
The process cost system would be appropriate for a paper mill where multiple stages are involved in the production of paper and it is difficult to track the costs of each individual product. This system would allow the mill to allocate costs to each stage of production and calculate the total cost of each unit of paper. The other businesses listed may benefit from job costing or a hybrid costing system, depending on their specific production processes.
Learning Objectives
- Identify the key distinctions between job order costing and process costing and understand the contexts in which they are best applied.