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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Job-Order Costing versus Process Costing

  1. a. Auto manufacturing
  2. b. Dental services
  3. c. Auto repair
  4. d. Costume making

Required:

CONCEPTUAL CONNECTION For each of the given types of industries, give an example of a firm that would use job-order costing. Then, give an example of a firm that would use process costing.

To determine

Give examples of firms that use job order costing and process costing, for the given industries.

Explanation

Job-order Costing and Process Costing:

A costing system which accumulates the cost on the basis of job is known job-order costing whereas a costing system which accumulates the cost of production on the basis of process or department is known as process costing.

a.

Auto Manufacturing:

A firm that manufactures automobiles from scratch will use job-order costing because different parts are build in different jobs.

Large automobile manufacturers who are presumed by customers that they offer customization or build automobiles on order according to the requirement of the customers use process costing. In reality, production does not start until the minimum numbers of orders reached for identical automobiles.

b.

Dental Services:

The dentists who provide basic dental services will use job-order costing because service firm often use job-order costing...

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