Final answer:
Costing of like or similar units of products in mass production is handled by process-costing systems, which leverage economies of scale to reduce costs as production quantity increases. This approach is most suitable for businesses like large retailers that produce high volumes to achieve lower average costs and thus potentially higher profits. Therefore, the correct option is D.
Step-by-step explanation:
The costing systems that are used for the costing of like or similar units of products in mass production are known as process-costing systems. This approach is contrasted with job-costing systems, which are used for unique or custom orders. Process-costing systems are effective for operations that produce large quantities of similar products, taking advantage of economies of scale, where the cost per unit decreases as production volume increases. This concept is evidenced by large retailers such as Costco and Walmart that leverage economies of scale to reduce per-unit costs substantially.
Understanding production technology and achieving the optimal scale of production are crucial for firms to minimize costs and maximize profits. A well-designed production technology that produces at a larger scale will generally have a lower average cost, leading to potential profits when the average cost of production is less than the market price. Mathematical models can be used to estimate and compare different production costs, ensuring cost-effective decisions in mass production scenarios.