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Job or Process Costing

Job costing, process costing. In each of the following situations, determine whether job costing or process costing would be more appropriate.

a. A CPA firm
b. An oil refinery
c. A custom furniture manufacturer
d. A tire manufacturer
e. A textbook publisher
f. A pharmaceutical company
g. An advertising agency
h. An apparel manufacturing plant
i. A flourmill
j. A paint manufacturer
k. A medical care facility
l. A landscaping company
m. A cola-drink-concentrate producer
n. A movie studio
o. A law firm
p. A commercial aircraft manufacturer
q. A management-consulting firm
s. A catering service
t. A paper mill
u. An auto repair shop

Solution Preview

*Tip: Job costing is typically used for special orders or when the product made is unique. Process costing is used when the products are more homogeneous in nature.

a. A CPA firm: Job Costing (No two companies are the same in terms of accounts).
b. An oil refinery: Process Costing (Oil is oil is oil)
c. A custom furniture manufacturer: Job Costing (Apparently, each piece ...

Solution Summary

*Tip: Job costing is typically used for special orders or when the product made is unique. Process costing is used when the products are more homogeneous in nature.

The solution tells you why each item belongs to job or process costing.

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