Process Costing is appropriate for which of the following firms?
A. Logistic and Transportation firms
B. Pharmaceutical and Healthcare firms
C. Tourism and Hospitality firms
D. Oil Refining firms
Choose the correct answer from the options given below:

Correct option is D

Process Costing is a costing method used in industries where production is continuous and the products pass through multiple stages of processing. It is most suitable for industries such as oil refining, chemical manufacturing, and textile production, where goods are produced in bulk and are indistinguishable from each other. Logistic, transportation, tourism, and hospitality firms follow service-based costing approaches rather than process costing. Thus, oil refining firms (D) are the correct answer.
Information Booster:
1. Definition of Process Costing: A costing method used for mass production of identical or homogeneous products.
2. Industries Using Process Costing: Oil refining, chemicals, textiles, food processing, and pharmaceuticals.
3. Stages of Process Costing: Production goes through multiple sequential stages.
4. Cost Accumulation: Costs are collected at each stage of production.
5. Comparison with Job Costing: Process costing is used for continuous production, whereas job costing is used for customized production.
6. Examples: Oil refining, paper manufacturing, sugar production, etc.
Additional Information:
· Logistic and Transportation firms (A) follow activity-based costing (ABC) to track costs based on specific services.
· Pharmaceutical and Healthcare firms (B) may use both job and process costing depending on production methods.
· Tourism and Hospitality firms (C) use service costing or activity-based costing rather than process costing.