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Job order cost accounting and Process Costing

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Explain the conditions under which job order cost accounting systems and process cost accounting systems are commonly applied. Name two companies that use each system?
 
 

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Solution Summary

The solution explains the conditions under which job order cost accounting systems and process cost accounting systems are commonly applied.

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I have answered questions on Job and Process Costing many times. As such, I am including two separate answers for you here. They both handle your question completely. So you have a choice.

Solution #1:
Job costing systems are used by companies that produce goods that a separately identifiable. That is the goods are either made to order by customers, and require the customer's personal specifications or they are produced in batches, so that the costs associated with producing each batch can be identified separately. Constructions companies would use job order costing, because each client will require their building to be constructed according to their own specifications. Therefore, when quoting a price to charge to each customer, the construction firm will determine the cost of each individual building separately. Then based on the expected costs the firm will determine the price it should charge for each building and the profit it is likely to make on each one. Ebenal General, Inc., a construction firm based in ...

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