Question:
Paper manufacturing industries adopts _______ costing. Why?
Paper manufacturing industries adopts _______ costing. Why?
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Use Process Costing for continuous, mass-production industries where the product is standardized (like paper, cement, sugar, or petroleum). Use Job Costing when products are unique and custom-made to customer specifications.
Updated On: Jun 17, 2026
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Solution and Explanation
Step 1: Identifying the Costing Method:
Paper manufacturing industries adopt Process Costing.
Step 2: Explaining the Manufacturing Flow (Why? - Reason 1):
Paper production is a continuous, sequential chemical and mechanical operation. Wood pulp must pass through several distinct, highly standardized departments (such as Digesting, Bleaching, Beating, Paper-Making, and Finishing) in a fixed order, which aligns perfectly with process-by-process cost tracking.
Step 3: Explaining the Nature of the Output (Why? - Reason 2):
The end product is highly standardized and homogeneous. Because individual sheets or rolls of paper cannot be traced back to separate material shipments or labor runs, managers must average total production costs across the entire volume of output over the period.
Paper manufacturing industries adopt Process Costing.
Step 2: Explaining the Manufacturing Flow (Why? - Reason 1):
Paper production is a continuous, sequential chemical and mechanical operation. Wood pulp must pass through several distinct, highly standardized departments (such as Digesting, Bleaching, Beating, Paper-Making, and Finishing) in a fixed order, which aligns perfectly with process-by-process cost tracking.
Step 3: Explaining the Nature of the Output (Why? - Reason 2):
The end product is highly standardized and homogeneous. Because individual sheets or rolls of paper cannot be traced back to separate material shipments or labor runs, managers must average total production costs across the entire volume of output over the period.
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