Question

Why would a manufacturer who operates in a mass production environment choose to use process costing to track its manufacturing​ costs?

A. Each unit is typically completed in the period in which it is started.
B. Each batch requires different product costs for completion.
C. The direct material and direct labor costs are not easily traced to the departments.
D. To minimize the risk of cost distortion related to overhead allocation.
E. The output is homogenous.

Answer 1

E. The output is homogeneous.

Step-by-step explanation:

E. The output is homogeneous.

Process costing is used to track manufacturing costs in a mass production environment because the output is homogeneous and similar costs are incurred for each unit. This method allows for the costs to be averaged across all units and allocated to each unit based on the number of units produced.