ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Which of the following businesses is most likely to use job costing as its main costing method?
A bespoke furniture maker is most likely to use job costing because each item is made to a customer's specification and is distinct. Costs are accumulated job by job. Continuous, identical output such as fuel, cans or cement is better suited to process costing.
- AA bespoke furniture maker producing one-off items to customer specificationCorrect
- BA oil refinery producing continuous output of identical fuel
- CA bottling plant filling identical drink cans around the clock
- DA cement works producing a standard product in continuous processes
Explanation
Job costing suits work done to individual customer specifications, where each job is distinct and costs are accumulated per job. The other three involve continuous or mass production of identical units, which suit process costing.
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