Final answer:
A company is more likely to use a job order cost system if it manufactures products with unique characteristics. This allows for the accounting of individualized production costs. Economies of scale and cost considerations influence decisions on the optimal production technology, where firms aim for the lowest total cost. Hence, the correct answer is option (C).
Step-by-step explanation:
A company is more likely to use a job order cost system if it manufactures products with unique characteristics (Option C). This cost accounting system is ideal for businesses that produce customized products or jobs that are distinct from each other.
On the contrary, a process cost system would instead suit a company that manufactures a large volume of similar products and whose production is continuous.
When a company considers production technology and cost, it is important to understand economies of scale. Economies of scale occur when the quantity of output increases, leading to a decrease in the cost per unit. This concept relates to the advantages that larger companies, such as Costco or Walmart, have due to their scale of production. They can operate a large factory at a lower average cost compared to a smaller factory.
In choosing production technology, the firm would select the option with the lowest total cost. If machine hours become cheaper, there is an incentive to shift towards more capital-intensive production (Technology 3).