The correct answer is: B. Job costing
Job costing is a costing method in which costs are assigned to individual units or batches of products. This method is used when the products are unique or made to order, such as custom-built furniture or machinery.
In job costing, each job is a cost unit to which all costs are assigned. This includes direct costs, such as materials and labor, as well as indirect costs, such as overhead. The costs of each job are then totaled to determine the job’s cost.
Job costing is a detailed costing method that can be used to accurately track the costs of individual products or jobs. This information can be used to set prices, make decisions about production, and evaluate profitability.
Here is a brief explanation of each option:
- Batch costing is a costing method in which costs are assigned to groups of similar products or services. This method is used when the products or services are produced in batches, such as cars or pharmaceuticals.
- Process costing is a costing method in which costs are assigned to processes or departments. This method is used when the products or services are produced in a continuous process, such as oil refining or chemical manufacturing.
- Operation costing is a costing method that combines elements of job costing and process costing. This method is used when the products or services are produced in a semi-continuous process, such as food processing or paper manufacturing.