17-1SE-i - 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?

i. A manufacturer of multivitamins

Step-by-Step Solution

Answer

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

Classification of costing system

The costing system is classified as the process costing and the job order costing system. The companies engaged in manufacturing specific, small quantity products are most likely to use the job order costing system. And the process costing system is used by the companies involved in activities required to go through various methods.

A manufacturer of multivitamins

The manufacturing of multivitamins involves the process of blending, mixing, polishing, etc., while manufacturing the multivitamins. Hence, the manufacturer of multivitamins is most likely to use a process costing system.