In: Accounting
When are companies likely to use a job costing system or process costing system? Describe the specific characteristics of each system and provide at least 2 examples from companies in your community for each system (at least 4 companies should be described).
Answer :
Introduction to Job & Process costing -
job costing alludes to the collection of the generation expenses to particular units or gathering of units .
while process costing alludes to the amassing of expenses for long creation forms in which the items are undistinguishable, this incorporate the creation of fuel.
When are companies likely to use a job costing system or process costing system?
Organizations will utilize job costing technique when the items are one of a kind, process costing will be utilized for institutionalized items.
Correspondingly, job costing is for the most part utilized for little creation forms while process costing is utilized by organizations with expansive generation runs. Therefore, firms that create merchandise to client taste and inclination and which require customization will be better set to utilize work costing as opposed to item costing.
Describe the specific characteristics of each system and provide at least 2 examples from companies in your community for each system (at least 4 companies should be described).
Job costing system has the following characteristics:
*In the job costing framework costs are collected either by job or by cluster. The labor expenses of a particular job are recorded in a period sheet and accumulated in a period sheet for that activity a short time later.
*Job costing framework is utilized for doling out expenses to particular occupations that are non-homogenous in nature. The framework can be either manual or modernized.
Example of companies using the job costing system include:
Boeing, Airbus, Oracle, Google, Lockheed Martin, etc.
These companies do not have a single process that produces all the products or services.
on the other hand Process costing has the following characteristics:
It manages items that are homogenous in nature; it likewise allocates expenses to various procedures since all units are indistinguishable. Additionally, the framework requires less record keeping when contrasted with work costing framework. It additionally can be utilized in both manual and modernized conditions.
Examples of companies using Process system include companies like
PnG, Unilever, Pepsi, Wrigleys (Chewing) companies.