Which type of company is least likely to use a process costing system?

Analyze the applicability of process costing to each type: Manufacturing companies often use process costing because they produce goods in large quantities with similar characteristics. Merchandising companies do not produce goods but sell finished products, so they typically use inventory costing methods like FIFO or LIFO. Service companies provide intangible services rather than physical goods, making process costing irrelevant for their operations.

Determine which company type is least likely to use process costing: Since service companies do not produce physical goods, they are least likely to use a process costing system. Their costs are typically allocated based on time, labor, or specific projects rather than a production process.