When Should Process Costing Be Used to Assign Costs to Products

question 68

Multiple Choice

When should process costing be used to assign costs to products?

• A)Calculation of unit costs requires the averaging of unit costs over all units produced
• B)Units produced are dissimilar
• C)Units produced are similar
• D)Either A or C are correct.

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Definitions:

Drop-In-The-Bucket Problem

A problem intrinsic to public goods: The good or service is usually so costly that its provision generally does not depend on whether any single person pays.

Public Goods

Goods or services that are non-excludable and non-rivalrous, meaning they are freely available to all and used by one person does not reduce availability to others.

Positive Externality

A benefit received by a third party resulting from an economic transaction in which they were not involved.

Public Good

An offering of goods or services to society's members at no cost, supplied by the government or private parties, aiming not to generate profit.