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Describe the type of costing system that is used in your organization (e.g., Job Order Costing,...

Describe the type of costing system that is used in your organization (e.g., Job Order Costing, Process Costing, etc.). Why do you think this system was chosen for implementation, and do you think it is the correct choice?

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Expert Solution

Our selected company is Nike, Inc., so the best costing system suitable for the company would be "Process costing". This is because Nike has been producing consumer goods and these goods are produced in several processes. Each process has it own costs and cost appropriation to each batch or unit and reaching out to the total cost to a product unit is possible.

The job costing is not appropriate because the products are not produced in a shot or in a department. Under job costing system, all the cost are collected at one department and apportioned among the products, which is not possible for the consumer products of the company.

The Activity- Based Costing, the costing of the company is minutely classified and appropriated to the products on the bases of the Activities used to produce a product. But this costing system is not appropriate for Nike because classifing each process costs under the ABC costing system is not possible, so appropriation is not possible.

ekkarill92 answered 2 years ago
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