Using an old family recipe, Alison Parkes started a company that produces non$-$ alcoholic fruit punch. The fruit punch is sold in $375$ml$,500$ml and $600$ml bottles to supermarkets and caf$$s$.$ The company has expanded rapidly, and Alison is currently seeking a bank loan to borrow the money necessary to invest in additional equipment. The bank has informed Alison that they will not consider her loan application until she supplies them with up$-$to$-$date financial statements for the business.

Alison has never bothered with financial statements before and she is puzzled as to how to determine the value of her fruit punch for the purposes of these financial statements. Alison thought of perhaps using job$-$order costing, which had been used at her previous employer. However, raw ingredients are continually being mixed to make more fruit punch, and more bottled fruit punch is always coming off the end of the bottling line. Alison didn$$t see how she could use a job$-$order costing system since the job never really ended. A friend has suggested that Alison investigate the feasibility of using a process costing system given the production environment of her company.

$1.$ To help Alison understand process costing systems, explain their similarities to the job$-$order costing system she is familar with.

$2.$ Do you think a job$-$order or process costing system would be more applicable for Alison$$s company? Explain.

$3.$ Should Alison consider implementing an activity$-$based costing system for product costing purposes? Why or why not?