Which of the following is a purpose of product costing?

• A. To calculate depreciation on assets.
• B. To establish the selling price for tendering.
• C. To forecast exchange rates.
• D. To determine credit terms with suppliers.

Answer: (B)

Product costing provides the cost of producing goods, which forms the basis for setting selling prices and bids. In tendering, a firm must quote a price that covers all production costs plus the desired profit, and knowing the cost per unit from product costing helps ensure the bid is both competitive and profitable. The other options aren’t about product costing: depreciation relates to asset accounting, forecasting exchange rates belongs to treasury/foreign exchange management, and determining credit terms with suppliers falls under purchasing and accounts payable. So the purpose that best fits is establishing the selling price for tendering.