Process costing be used for a service organization

1. Can process costing be used for a service organization? Explain. Describe how process costing can be used for JIT manufacturing firms.
2. Under what conditions will the weighted average and FIFO methods give essentially the same results?
3. Explain why process costing is appropriate for this haircutting operation.
4. Calculate the cost per haircut.
5. Can you identify some possible direct materials used for this haircutting service? Is the usage of direct materials typical of services? If so, provide examples of services that use direct materials. Can you think of some services that would not use direct materials?

Sample Solution