Concept explainers
Would the following companies most likely use a
Paint manufacturer
Identify whether the given company most likely to use a job order costing system or a process costing system.
Explanation of Solution
Job order costing: Job order costing is one of the methods of cost accounting under which cost is collected and gathered for each job, work order, or project separately. It is a system by which a factory maintains a separate record of each particular quantity of product that passes through the factory. Job order costing is used when the products produced are significantly different from each other.
Process Costing: Process costing is method of cost accounting in which all the costs that are incurred production process are recorded. Output of one process becomes input for next process. This method is used to apply cot to similar products that are mass-produced in uninterrupted manner.
The paint manufacturer most likely uses a process costing system.
Want to see more full solutions like this?
Chapter 17 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Financial Accounting, Student Value Edition (4th Edition)
Construction Accounting And Financial Management (4th Edition)
Cost Accounting (15th Edition)
Financial Accounting, Student Value Edition (5th Edition)
Managerial Accounting (5th Edition)
- Can a company use both job order costing and process costing? Why or why not?arrow_forwardHow do firms collect job-related information on driver usage in an activity-based costing system?arrow_forwardGive some examples of service firms that might use job-order costing, and explain why it is used in those firms.arrow_forward
- Can process costing be used for a service organization? Explain. Describe how process costing can be used for JIT manufacturing firms.arrow_forwardIf a job order cost system tracks the direct materials and direct labor, why doesn't It track the actual overhead used for a specific job?arrow_forwardWhy are the accounting requirements for job-order costing more demanding than those for process costing?arrow_forward
- Explain how process costing differs from job order costing.arrow_forwardWhen 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_forwardHow do job order costing and process costing differ with respect to recording direct materials and direct labor?arrow_forward
- Discuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs.arrow_forwardWhy are there conversion costs in both job order costing and process costing?arrow_forwardWhat type of costing system do most service businesses use, and why do they use it?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning