Question

2. For each of the following manufacturing situations, indicate whether job order or process costing is more appropriate and why. Job order or process costing? Company descriptions Why? Manufacturer of chocolate candy bars Manufacturer of carbonated beverages Manufacturer of high-quality men's suits Manufacturer of subway cars Printer of a variety of history books

Answer 1

Job Order costing:

• Optimal accounting method when production and labor cost are not same.
• It is basically a complex and appropriate system.
• The product type is custom order.
• In this method, Unit costs are calculated by Job cost sheet

Process Costing:

• Optimal costing system when production and labor cost are same.
• It is not so complex system.
• The product type is mass production.
• In this method, Unit costs are calculated by departmental costs.

Company Description	Job order or Process Costing	Why?
Manufacturer of chocolate candy bars	Process Costing	This is a process costing method because there is a manufacturing of cholocate candy bars in a bulk.
Manufacturer of carbonated beverages	Process Costing	This is a process costing method because there is also a bulk production of carbonated beverages.
Manufacturer of high- quality men's suit	Job Order costing	This is a Job order costing because each and every suits manufactured are distinct in nature.
Manufacturer of subway cars	Job order Costing	This is a Job order costing because every subway car manufactured is different in models.
Printer of a variety of history books	Job Order Costing	This is a job order costing because every history books are printed in variety by different authors, or by different contents, or by different editions etc.