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Costing Processes

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SAC has developed revolutionary manufacturing techniques utilizing its new spark plug manufacturing technology to offer special-order spark plugs for the auto racing industry. The company is currently using process costing for its spark plugs but is considering using job order costing for the new specialty spark plugs. How does job order costing differ from process costing? Should SAC use process or job order costing for the specialty spark plugs? Make a recommendation for SAC. Be sure to fully back up your recommendation.

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SAC has developed revolutionary manufacturing techniques utilizing its new spark plug manufacturing technology to offer special-order spark plugs for the auto racing industry. The company is currently using process costing for its spark plugs but is considering using job order costing for the new specialty spark plugs. How does job order costing differ from process costing? Should SAC use process or job order costing for the specialty spark plugs? Make a recommendation for SAC. Be sure to fully back up your recommendation.

Concept of Costing
Costing is the amount used to offer a particular product or service. Costing can be divided into three elements:
1) Material cost
2) Labour cost
3) Expenses
Further there are two categories of costing:
1) Job costing
2) Process costing

Meaning of Job costing
As per wisegeek.com, "Job costing is the process of determining the labor and materials cost for each job in a systematic way, and then using this information to create a quote for the customer."
Thus job costing is a method of costing where for each job the cost is ascertained. This is because each job is different in nature and hence separate quote is required. Job here means a group of small activities which we can ascertain in any goods' production.
Meaning of Process costing
As per svtution, "Process costing is famous topic of cost accounting. It is that method of costing which is used at that industry where production ...

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Solution discusses the Costing Processes

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