Question

Write three complete and well composed paragraphs where you use, as an example, a company that operates and describe how process costing would help the business owners manage their business.

Answer 1

Answer)

Here in this case the company I select is Oneplus.

Here,OnePlus in general stops production of old model after the launch of new model and during such manufacturing cycle the phones goes through various production process in large quantity until the launch of next product.Hence,Process costing is very useful in such situations as large quantity of similar units are manufactured.

Here the process costing is useful to OnePlus to allocate all the costs all the products are homogeneous and hence no specific overhead allocation rate Is needed as all units need similar time and resources.All the costs that they incurred can be pooled and divided by unit produced to get cost per unit.

Moreover,It is flexible as if the company want to add or delete additional unit then it is very easy for them and all they need to do is keep new book of account for new process as it is easy to separate the costing from process to process in process costing.