Q 15E_i - 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.

i. A company that makes large quantities of one type of tankless hot water heaters.

Step-by-Step Solution

Answer

Answer:

Process costing system is used by the companies that manufacture large quantities of one type of tankless hot water heaters.

Step-by-Step Solution:

Step 1: Process  costing system

The companies that are engaged in manufacturing the same product in large quantity are expected to use the process costing system for determining the cost of the each product manufactured by the company.

Step 2: Classification of costing system according to the characteristics

A company making the large quantities of one type of tankless hot water heaters use process costing system because the company manufacture the heaters in large quantity of one type only.