Question

Which one of the following statements is false?

		In a job order costing system, individual jobs use different quantities of production resources.
		In a process-costing system, each unit uses approximately the same amount of resources.
		An organization that manufactures several types of cereal would use a job order costing system.
		A corporation whose sole business activity is processing the customer deposits of several banks would use a process-costing system.

Answer 1

Answer:

Option c: An organization that manufactures several types of cereal would use a job order costing system.

Explanation:

Process costing refers to costing dine when the manufacturing can be broken in many processes such as manufacturing of cement, paper, etc.

Job costing is used when the organization deals with various customer orders.

In Job costing, individual jobs use different quantities of materials.

In Process costing, the cost per unit is approximately same.

The organization that manufactures several types of cereals will not use job costing system because the cereals are same for all customers There are no special orders.

Corporation processing customer deposits of banks will use process costing.

In case of any doubt, please comment.