The correct answer is: C. process costing system.
A process costing system is a costing system that is used to track the costs of production in a manufacturing environment where a large number of identical units are produced. In a process costing system, costs are accumulated by department or process, and then assigned to units of product based on the number of units produced in each department or process.
A conversion expense costing system is a costing system that is used to track the costs of converting raw materials into finished goods. Conversion costs include direct labor and manufacturing overhead.
An inventory costing system is a costing system that is used to track the costs of inventory. Inventory costing systems can be either perpetual or periodic. A perpetual inventory system tracks the costs of inventory on a continuous basis, while a periodic inventory system only tracks the costs of inventory at the end of an accounting period.
A job costing system is a costing system that is used to track the costs of individual jobs or batches of products. In a job costing system, costs are accumulated by job or batch, and then assigned to units of product based on the actual costs incurred for each job or batch.
Here is a table that summarizes the key differences between the four costing systems:
| Costing system | Purpose | Costs tracked | How costs are assigned to units of product |
| — | — | — | — |
| Process costing system | Track the costs of production in a manufacturing environment where a large number of identical units are produced | Accumulated by department or process, and then assigned to units of product based on the number of units produced in each department or process |
| Conversion expense costing system | Track the costs of converting raw materials into finished goods | Direct labor and manufacturing overhead |
| Inventory costing system | Track the costs of inventory | Can be either perpetual or periodic |
| Job costing system | Track the costs of individual jobs or batches of products | Accumulated by job or batch, and then assigned to units of product based on the actual costs incurred for each job or batch |