QuestionJune 2, 2025

Houlihan Automotive specializes in replacing the brake pads and shoes on domestic automobiles. The replacement is similar for each type of automobile. Each replacement takes one labor hour.0.75 machine hours, and costs 55 in direct materials. Houlihan charges customers a flat fee of 120 Which cost system should Houlihan use and why? A The process cost system because the service Houlihan provides is repetitive and routine. B The process cost system because the service Houlihan provides always costs the customers the same amount of money. C The job order cost system because the service Houlihan provides represents an individual job. D The job order cost system because the service Houlihan provides cannot be performed continuously.

Houlihan Automotive specializes in replacing the brake pads and shoes on domestic automobiles. The replacement is similar for each type of automobile. Each replacement takes one labor hour.0.75 machine hours, and costs 55 in direct materials. Houlihan charges customers a flat fee of 120 Which cost system should Houlihan use and why? A The process cost system because the service Houlihan provides is repetitive and routine. B The process cost system because the service Houlihan provides always costs the customers the same amount of money. C The job order cost system because the service Houlihan provides represents an individual job. D The job order cost system because the service Houlihan provides cannot be performed continuously.
Houlihan Automotive specializes in replacing the brake pads and shoes on domestic automobiles.
The replacement is similar for each type of automobile. Each replacement takes one labor hour.0.75
machine hours, and costs 55 in direct materials. Houlihan charges customers a flat fee of 120
Which cost system should Houlihan use and why?
A
The process cost system because the service Houlihan provides is repetitive and routine.
B
The process cost system because the service Houlihan provides always costs the customers the
same amount of money.
C
The job order cost system because the service Houlihan provides represents an individual job.
D
The job order cost system because the service Houlihan provides cannot be performed
continuously.

Solution
4.4(262 votes)

Answer

A. The process cost system because the service Houlihan provides is repetitive and routine. Explanation 1. Identify the nature of the service The service is repetitive and routine, as it involves replacing brake pads and shoes in a similar manner for each automobile. 2. Determine cost system characteristics Process cost systems are used for repetitive, homogeneous services or products. Job order cost systems are used for unique, individual jobs. 3. Match service to cost system Since Houlihan's service is repetitive and routine, it aligns with the characteristics of a process cost system.

Explanation

1. Identify the nature of the service<br /> The service is repetitive and routine, as it involves replacing brake pads and shoes in a similar manner for each automobile.<br /><br />2. Determine cost system characteristics<br /> Process cost systems are used for repetitive, homogeneous services or products. Job order cost systems are used for unique, individual jobs.<br /><br />3. Match service to cost system<br /> Since Houlihan's service is repetitive and routine, it aligns with the characteristics of a process cost system.
Click to rate:

Similar Questions