Answer (D) is correct . Like products that are mass produced should be accounted for using process costing techniques to assign costs to products. Costs are accumulated by departments or cost centers rather than by jobs, work-in-process is stated in terms of equivalent units, and unit costs are established on a departmental basis. Process costing is an averaging process that calculates the average cost of all units.
Answer (A) is incorrect because Job-order costing is employed when manufacturing involves different (heterogeneous) products.
Answer (B) is incorrect because Direct costing includes only variable manufacturing costs in unit cost. It may be used whether products are homogeneous or heterogeneous and with either process or job-order costing.
Answer (C) is incorrect because Absorption costing includes all manufacturing costs as part of the cost of a finished product. It may be used whether products are homogeneous or heterogeneous and with either process or job-order costing.
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