Q 15E_b - Horngren'S Financial And Managerial Accounting

Question

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

b. A company that pulverizes wood into pulp to manufacture cardboard.

Step-by-Step Solution

Answer

Answer:

Process costing system is used by the company that pulverizes wood into pulp to manufacture the cardboard.

 

Step-by-Step Solution:

Step 1: Process costing system

The companies that manufacture the products which passess through various processes may use the process costing system. This costing system helps the company in determining the cost at every process. 

Step 2: Classification of costing system according to the characteristics

As per the definition of process costing explained, a company that pulverizes wood into pulp to manufacture the cardboard may uses the process costing system because the pulverization is a process to manufacture the cardboard.