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Which of the following companies is most likely to use a process costing system.

A) a manufacturer of breakfast cereal
B) a manufacturer of large commercial aircraft
C) a custom jewelry manufacturer
D) a law firm

User Eris
by
8.5k points

1 Answer

3 votes

Final answer:

A) a manufacturer of breakfast cereal is most likely to use a process costing system, as it produces large quantities of a standardized product, which aligns with the methodology of process costing.

Step-by-step explanation:

The question is asking to identify which company is most likely to use a process costing system. The correct answer is A) a manufacturer of breakfast cereal. Process costing is used by companies that produce homogeneous products in continuous processes. Here is a contrast between options B and D—while option B, a manufacturer of large commercial aircraft, is involved in complex and many times unique productions leading to potentially use job costing, option D, a law firm, does not manufacture any physical goods but provides tailored services, which is not relevant to process costing.

On the other hand, a cereal manufacturer typically produces large quantities of a standardized product, making it an ideal candidate for process costing where costs are accumulated over a period and then allocated evenly across all units produced.

User Aaditya
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