Question

Assertion (A):
Process costing method is useful in the manufacturing of products like steel, paper, medicines, soaps, chemical etc.
Reason (R):
Process costing is a method of costing used in industries where the material has to pass through two or more processes for being converted into a final product.

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Hint:

Logic Tip: Process costing is used where production flows continuously through multiple processes.

Answer 1

The Correct Option is A

Step 1:
Process costing is used where production is continuous and goods pass through several stages of production.

Step 2:
Industries such as steel, paper, chemicals, soaps, and medicines use process costing because production takes place in sequential processes.

Step 3:
Both Assertion and Reason are correct. The reason correctly explains why process costing is suitable for such industries.

Step 4:
Hence, the correct answer is: \[ \boxed{\text{(1)}} \]