Detailed Answer
(a) The requirement is to identify the appropriate type
of costing system. Answer (a) is correct because job-order costing
systems are designed to accumulate costs for tasks or projects
that are unique and nonrepetitive. Service organizations are
interested in identifying the costs applicable to each customer
and/or each service call. Answer (b) is incorrect because the
primary purpose of activity-based costing systems focuses on
generating more accurate cost information by costing activities
using cost drivers. Answer (c) is incorrect because process costing
systems are designed for homogeneous products that are
mass produced in continuous production runs. Answer (d) is
incorrect because operations costing systems are designed for
batches of homogeneous products; operations costing is a hybrid
costing method between job-order and process costing.
