Final answer:
A manufacturing company would most likely use a job cost system to track the costs of manufacturing products that vary with each job. Retail, service, and financial companies use different methods for tracking costs. Hence, the correct answer is option (1).
Step-by-step explanation:
The type of company that would most likely use a job cost system is a manufacturing company. A job cost system is used when products are manufactured to customer specifications or when batches of different products are manufactured. In such a setting, each job can vary significantly in costs due to the consumption of different amounts of raw materials, labor, and overhead. Retail companies generally use a perpetual or periodic inventory system due to the nature of selling similar items to many customers.
Service companies may track costs per project but may not use the traditional job cost system used in manufacturing since they often do not have tangible goods to account for. Financial companies are usually not involved in manufacturing and do not use job cost systems because their services are related to financial transactions or consulting, which are tracked differently.
Furthermore, when considering the production technology with the lowest total cost, firms may shift their production methods. For example, when the cost of machines increases, a company would generally expect a shift toward less capital-intensive (machines) and more labor-intensive processes.