Question

A standard cost system may be used in

a. job order costing, but not process costing
b. process costing, but not job order costing
c. either job order costing or process costing
d. neither job order costing nor process costing

Answer 1

A standard cost system can be used in both job order costing and process costing. It helps track and evaluate costs in different scenarios, such as individual jobs or continuous production processes.

Step-by-step explanation:

A standard cost system can be used in both job order costing and process costing. It is a cost accounting method that sets predetermined standards for costs such as materials, labor, and overhead. These standards are then used to evaluate actual costs and measure performance.

In job order costing, a standard cost system helps determine the costs associated with each individual job or project. It allows for better tracking of materials used, labor hours worked, and overhead expenses incurred for specific jobs, which is particularly useful in industries such as construction or custom manufacturing.

In process costing, a standard cost system helps calculate the costs of producing identical units of a product in a continuous production process. It provides benchmarks for the cost per unit, allowing companies to monitor and control production costs more effectively. This is commonly used in industries such as chemicals, food processing, and oil refining.