A job costing system is most appropriately used by which type of company?

• A. A utility company
• B. A gasoline refinery
• C. A custom furniture manufacturer
• D. A flour milling company

Answer: (C)

Verified step by step guidance

1. Understand the concept of a job costing system: A job costing system is used to track costs for specific jobs or projects. It is most suitable for companies that produce unique or customized products, as it allows for detailed tracking of materials, labor, and overhead for each individual job.
2. Analyze the characteristics of each company type listed in the problem: A utility company typically provides standardized services, a gasoline refinery produces standardized products, and a flour milling company also produces standardized goods. These companies are more likely to use process costing systems rather than job costing systems.
3. Consider the custom furniture manufacturer: This type of company produces unique, customized furniture pieces for individual customers. Each job or project is distinct, requiring specific materials, labor, and overhead tracking, which aligns perfectly with the job costing system.
4. Match the job costing system to the appropriate company type: Since the custom furniture manufacturer deals with unique and customized products, it is the most appropriate type of company to use a job costing system.
5. Conclude that the correct answer is the custom furniture manufacturer, as it fits the criteria for using a job costing system due to the nature of its production process.