Question

What manufacturing method does Tootsie roll use and Why? ( job-order-costing, process costing, and hybrid costing)Under what circumstances would they use another costing method?

Answer 1

Tootsie Roll - engage in Manufacturing and selling of confectionery-- This type of Industry should follow Job Order base costing and under job Order base costing , they should follow " Batch Costing "

What manufacturing method does Tootsie roll use and Why? ( job-order-costing, process costing, and hybrid costing)

As per Report of Tootsie Roll, Noticed that this company engaged in Manufacturing and sale of confectionery product for last 108 years . They are selling product under different brand name like Tootsie Roll, Tootsie Roll Pops, Caramel Apple Pops etc.

In case of Hardcore manufacturing with high volume growth , it will be good to have Job Order costing system to follow . Hybrid costing system is mix of Job order costing as well as Process costing.

Job costing system is more relevant in case of Manufacturing company mainly to track cost ( material , labour , Overhead) on the basis of individual Job wise . This will have clear idea about Product base costing and easy to track cost project wise and identify any cost overrun in any project ,   

Particularly under Job Order costing system , Tootsie can use Batch Costing method

Normally, in case of Confectionary based company , most useful method to follow is Batch costing .In this type of Industry , production is carried over in batches . Under this method , batch of similar product is regarded as One Job and cost will be ascertained accordingly .