Question

4. Job-costing is likely to be used by A) oil refining companies B) advertising agencies C) Meat packing processors D) breakfast cereal producers

Answer 1

Answer to Question

Oil refining companies use process costing. Process costing is used when mass production of similar type of products takes place.

Advertising Agencies use job costing. Job Costing assigns costs to different products/jobs. It is generally used when the products are not identical in nature. The customers of advertising agencies will have different demands as per their requirements so the method of costing which is suitable for advertising agencies is job costing.

Meat packing processors use joint product costing. Joint product costing is the cost which arises due to a common raw material or production process. Meat packing processors use joint product costing because various meat pieces are processed from one single piece of meat.

Breakfast cereal producers use process costing because they produce continuously over a large period of time. They don't have separate jobs.

So the answer to question is

Job Costing is likely to be used by

B) Advertising Agencies.