Which of the following methods of costing is used for chemical products?

Correct option is B

Chemical products are manufactured through a continuous, standardized, and sequential production process, where the output is homogeneous in nature. In such industries, production flows through different stages (processes), and costs are accumulated for each process.
This system of accumulating and assigning costs to different stages of production is known as Process Costing. Therefore, the correct answer is (b) Process Costing.
Industries such as chemicals, petroleum, paints, pharmaceuticals, cement, and textiles typically use process costing due to their repetitive production patterns and uniform output characteristics.
Information Booster
1. Process costing is suitable where production is continuous and units are identical.
2. Costs are collected process-wise, not job-wise.
3. Process-wise cost sheets help determine cost per unit at each stage.
4. Work-in-progress (WIP) often exists in process industries and is valued using methods like equivalent units.
5. Losses such as normal loss and abnormal loss are also accounted for under process costing.