Question

Which method of costing is suitable in case of mass production industries manufacturing
standardized products, wherein raw materials pass through a number of processes in a particular
sequence?​

Answer 1

Answer:

Everything you need to know about the methods of costing. The method of costing refers to a system of cost ascertainment and cost accounting.

Industries differ in their nature, in the products they produce and the services they offer. Hence, different methods of costing are used by different industries.

For example, the method of costing employed by a building contractor is different from that of a transport company.

Explanation:

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Answer 2

Answer:

Process Costing is suitable in the case of mass production industries manufacturing standardized products, wherein raw materials pass through a number of processes in a particular sequence.

Explanation:

• Industries that engage in mass production adopt the technique.
• The raw material goes through a variety of steps before being finished.
• For the subsequent step, the completed product of one process underwent a series of procedures.
• Chemical plants, sugar refineries, etc. employ this technique.
• As a result, manufacturing is constant rather than sporadic.
• The result of one process becomes the input of the next, with each process denoting a different step of manufacturing.
• By averaging the cost over the units produced, the unit cost is determined, and the cost per unit of each procedure is determined.
• This technique is utilized in many different businesses, including those that process food, produce chemicals, refine oil, make paper, mill grain, etc.

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