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Which cost systems would companies use, job order or process

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Identify which costing system - job order or process cost - the following companies would use:
(a) Quaker Oats, (b) Ford Motor Company, (c) Kinko's Print Shop, and (d) Warner Bros. Motion Pictures.

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Solution Preview

Response is 416 words

First, let's describe the differences between job-order costing and process costing and the types of situations where each might be used. What characteristics of each process make it most appropriate for these situations? Then, I'll put these four companies in their spots!

Job Order Costing
This costing method is used when you have products or batches that differ from each other and so each product or batch may have different costs.

Job Order Costing tracks the costs that are assigned to each job. A job can be for many units (like a batch of coffee beans being baked) or one unit (building houses). Direct costs ...

Solution Summary

Discussion is 416 words which includes comparing and contrasting these methods in everyday language and then showing how each firm fits into one or the other. The student will know how to do this for other similar assignment after this tutorial.

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See Also This Related BrainMass Solution

BYP2-1 Managerial Accounting/ Job Costing

BYP2.1 Du Page Products Company uses a job order cost system. For a number of months
there has been an ongoing rift between the sales department and the production
department concerning a special.order product, TC.1. TC.1 is a seasonal product
that is manufactured in batches of 1,000 units. TC.1 is sold at cost plus a markup
of 40% of cost.
The sales department is unhappy because fluctuating unit production costs
significantly affect selling prices. Sales personnel complain that this has caused
excessive customer complaints and the loss of considerable orders for TC.1.
The production department maintains that each job order must be fully costed on
the basis of the costs incurred during the period in which the goods are produced.
Production personnel maintain that the only real solution to the problem is for the
sales department to increase sales in the slack periods.
Sandra Devona, president of the company, asks you as the company accountant
to collect quarterly data for the past year on TC.1. From the cost accounting system,
you accumulate the following production quantity and cost data.

Quarter
Costs 1 2 3 4
Direct materials $100,000 $220,000 $80,000 $200,000
Direct labor 60,000 132,000 48,000 120,000
Manufacturing 105,000 123,000 97,000 125,000
overhead
Total 265,000 475,000 225,000 445,000 225,000

Production in 5 11 4 10
batches
(per
batch)

Unit cost (per $53,000 $43,182 $56,250 $44,500
batch)

Instructions
With the class divided into groups, answer the following questions.
a. What manufacturing cost element is responsible for the fluctuating unit costs?
Why?
b. What is your recommended solution to the problem of fluctuating unit costs?
c. Restate the quarterly data on the basis of your recommended solution.

The problem is located in Chapter 2.

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