Final answer:
A chemical company would use process costing because it suits the continuous and standardized nature of their production processes, benefiting from economies of scale and the six-tenths rule. A building contractor, conversely, would use job costing to keep track of the unique costs associated with each construction project.
Step-by-step explanation:
Would a chemical company use job costing or process costing? A chemical company typically engages in operations that are continuous and involve mass production of similar products, which is why process costing is more appropriate. Process costing accumulates costs for some time instead of on a per-job basis, making it suitable for industries like chemical production where economies of scale come into play.
This form of costing reflects how the chemical industry benefits from the six-tenths rule, which illustrates how increasing production leads to a less-than-proportional increase in costs, promoting efficiency.
On the other hand, what about a building contractor? A building contractor would most likely utilize job costing because each construction project is unique and has its own separate costs. Job costing allows for detailed tracking of material, labor, and overhead costs specific to each job, which is essential for contractors to manage each project's budget and profitability accurately.