Question

Answer the following questions
1) Process costing is suitable for
a) Hospitals b) Oil refining firms c) Transport firms d) Brick laying firms​

Answer 1

1. Process costing is suitable for-

b) Oil refining firms

Process costing is only applicable for industries producing uniform or homogenous products. The industry must also have continuous production.

• Only specific manufacturing industries use this process.
• It aims at collecting costs from each section of the manufacturing industry and then distribute them to each product that is produced by it.
• It keeps a track of the cost of each product.

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Answer 2

Answer:

Process costing is suitable for Oil refining firms

Explanation:

Process costing refers to a method of accumulating the cost of production by the process. It finds use in mass production industries producing standard products such as steel, sugar, chemicals, oils, etc. The goods produced in all such industries are the same and all factory processes are standardized. In such industries the outputs are like units and each unit of the product undergoes a similar operation in the process.

The system of process costing is appropriate for industries involving continuous production of a single product or products through or through a set of processes. It is in use in the production of paper, rubber products, medicines, chemical products. It is also very common in flour mills, bottling companies, canning plants, breweries, etc.

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