Final answer:
Companies go through the process of calculating per-unit costs in a process costing system to allocate production costs accurately to identical mass-produced products, despite the complications such as cost allocation among units. Process costing is chosen for its benefits in standardized pricing and efficiency over the simpler job-order costing, particularly suitable for uniform product industries.
Step-by-step explanation:
Companies calculate the per-unit costs in a process costing system to accurately assign production costs to mass-produced similar items. Unlike job-order costing, process costing averages costs over large numbers of identical products, making it ideal for industries such as manufacturing or processing. The complications involved include allocating shared costs among all units produced and dealing with incomplete production cycles or varying stages of completion.
To perform this, companies determine cost structures for total fixed and variable costs to calculate total cost, average variable cost, average total cost, and marginal cost, employing formulas like AC = TC/Q and MC = ΔTC/ΔQ. While process costing can seem more complicated than job-order costing, the benefits of standardized pricing and efficiency in output reporting can outweigh the intricacies for certain types of industries.