17-1SE-h - Horngren'S Financial And Managerial Accounting

Question

Distinguishing between job order costing and process costing

Would the following companies most likely use job order costing or process costing?

h. A manufacturer of frozen pizza

 

Step-by-Step Solution

Answer

A manufacturer of frozen pizza is most likely to use process costing system.

Process costing

The process costing system is used by the companies which produce the products by following different procedures or a series of processes. 

A manufacturer of frozen pizza

A manufacturer of frozen pizza prepares the pizza by following the procedure involving forming the dough, baking, freezing, etc. Hence, the manufacturer of frozen pizza is most likely to use a process costing system.