Question

why would it be inappropriate for a custom home builder to use process costing

Answer 1

The building a custom home is a job because a custom home will be unique and easy to distinguish from other homes. A job costing system records costs and revenues for each job. As each job at Custom home builder results in a unique product and has different labor and material requirements, the company will prefer to use a job costing system instead of process costing. The process costing is more suitable when company’s produces identical units of product in batches with the usage of a consistent process track costs