Concept explainers
Cost Accounting Systems
Cost accounting systems are used to measure, record and report product costs. Managers are used products costs for setting product costs, controlling setups and developing financial statements. They are two types of Cost accounting systems they are:
Job order costs , and- Process costs
Job order costs
It is a method of cost accounting, in which cost is collected and accumulated for each job, work order, or project separately. Especially the job order costing is followed in organizations where customized goods are produced.
Process costs
It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.
To Identify: The following industry comes under Job- order costing or
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Financial & Managerial Accounting
- When using job order costing for a professional service business, the primary product (service) costs are: A.Direct Materials and Overhead B.Direct Materials and Direct Labor C.Direct Materials. Direct Labor, and Overhead D. Direct Labor and Overheadarrow_forwardJob-Order Costing versus Process Costing a. Hospital services b. Custom cabinet making c. Toy manufacturing d. Soft-drink bottling e. Airplane manufacturing (e.g., 767s) f. Personal computer assembly g. Furniture making (e.g., computer desks sold at discount stores) h. Custom furniture making i. Dental services j. Paper manufacturing k. Nut and bolt manufacturing l. Auto repair m. Architectural services n. Landscape design services o. Flashlight manufacturing Required: Identify each of these preceding types of businesses as using either job-order or process costing.arrow_forwardGive some examples of service firms that might use job-order costing, and explain why it is used in those firms.arrow_forward
- Which of the following production characteristics is better suited for process costing and not job order costing? Each product batch is distinguishable from the prior batch. The costs are easily traced to a specific product. Costs are accumulated by department. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process.arrow_forwardHow is a job order cost system used in a service industry?arrow_forwardA job order costing system is most likely used by which of the following? a pet food manufacturer a paper manufacturing company an accounting firm specializing in tax returns a stereo manufacturing companyarrow_forward
- Which of the following is typically a job-order costing firm? a. Paint manufacturer b. Pharmaceutical manufacturer c. Cleaning products manufacturer d. Cement manufacturer e. Large regional medical centerarrow_forwardWhich of the following product situations is better suited to job order costing than to process costing? A. Each product batch is exactly the same as the prior batch. B. The costs are easily traced to a specific product. C. Costs are accumulated by department. D. The value of work in process is based on assigning standard costs.arrow_forwardCan a company use both job order costing and process costing? Why or why not?arrow_forward
- Job order versus process costing Which of the following industries would typically use job order costing, and which would typically use process costing?arrow_forwardFollowing is a list of manufactured products. For each product, would a job order or a process cost system be used to account for the costs of production? a. lumber b. buildings c. airplanes d. gasoline e. cereal f. textbooks g. paint h. jeansarrow_forwardHow do firms collect job-related information on driver usage in an activity-based costing system?arrow_forward
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