In: Accounting
Do you think job order costing or process costing applies to accounting firms that primarily complete tax returns for corporate and individuals? Support your view. Please provide reference
YES,
Job order costing is a system of expense monitoring in which a business only creates products to fill customer/client orders. Employees complete job order cost sheets for each order and usually separate expenses into three main categories: direct material, direct labor and manufacturing overhead. Companies in many industries can use job order costing, though a variety of product offerings/services complicates the tracking of expenses.This is the actual definition which says a firm or company which costs there products or services based on the order of customer can use job order costing
accounting firms charge their clients on the basis of the service provided to them as per there request,unless until a serrvice is requested by our clients we dont rovide it to them
so accountig firms can use job order costing
Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other. In other words, the cost of each product produced is assumed to be the same as the cost of every other product. Under this concept, costs are accumulated over a fixed period of time, summarized, and then allocated to all of the units produced during that period of time on a consistent basis. When products are instead being manufactured on an individual basis, job costing is used to accumulate costs and assign the costs to products. When a production process contains some mass manufacturing and some customized elements, then a hybrid costing system is used.
they cannot use process costing