A process cost system would be used for all of the following products except

A process cost system would be used for all of the following products except

a.chemicals.

b.computer chips.

c.motion pictures.

d.soft drinks.

The correct answer and explanation is :

The correct answer is:

c. motion pictures.

Explanation

A process cost system is used in industries where products are mass-produced, and the cost of production is accumulated over a continuous process. This system assigns costs to large quantities of identical or similar products that pass through a series of production stages. It is particularly useful for manufacturing environments where products are indistinguishable from one another.

Now, let’s analyze the given options:

1. Chemicals (a):

• The chemical industry involves continuous production processes such as refining, mixing, and chemical reactions.
• Since products (e.g., paint, gasoline, pharmaceuticals) are produced in bulk and cannot be easily distinguished, a process cost system is ideal.

1. Computer Chips (b):

• The semiconductor industry also follows a process-based approach where raw materials undergo multiple processing stages (etching, doping, and assembly).
• The cost must be accumulated over different production phases, making the process cost system appropriate.

1. Soft Drinks (d):

• The beverage industry, including soft drinks, operates on mass production with bottling and packaging as part of the process.
• Since large batches of identical units are produced, a process cost system is the best fit.

1. Motion Pictures (c) [Correct Answer]:

• Unlike manufacturing industries, motion picture production is unique and project-based.
• Each film is distinct, requiring different resources, actors, special effects, and marketing strategies.
• Costs are assigned to a single project rather than spread across identical units, making a job order costing system more suitable.

Conclusion

Motion picture production does not involve continuous, identical production processes but rather unique, customized projects. Hence, it does not fit within a process cost system, making option C the correct answer.