Question

1. Both job order cost and process cost are systems used in accounting to track manufacturing costs. What circumstances related to the manufacturing would justify the use of one vs another?

2.What is your opinion about the value of harmonizing accounting standards for global equity markets? Please explain.

Answer 1

Ans 01 :

Job order costing is related to identify costing that treats each individual processes or costs for determining total cost of the product. It is costing related to Unit level.

Process costing on the other hand allocating total costs to each department and processes.

Hence Process costing is more benificial to when a manufacturing firm using batch process. For an example a plant manufacturing only one type notebook. So instead of following cost on each unit of product the firm allocate total cost department wise. Job order costing will be more suitable when a firm makes custom order/product. Like a firm make custome furniture. So here the firm costs each unit level to determine the total cost.

Ans 02 :

Harmonizing accounting standards for global equity markets will remove the barrier of global firms to access different capital markets. For an example accounting standards in USA and India are different, So a firm interested to list in both market needs to follow and prepare accounting as per both regulators. Which is tedeous for the firm.

On the other hand participation of global investors will be much easier. As firms will be easy to track globally. Investment flow will be much higher.

So Harmonizing accounting standards will lead to much easier International expansion for firms and participation of investors also will be higher.