Concept explainers
Which of the following product situations is better suited to
A. Each product batch is exactly the same as the prior batch.
B. The costs are easily traced to a specific product.
C. Costs are accumulated by department.
D. The value of work in process is based on assigning
Concept introduction:
Job order costing:
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Process Costing System:
As its name suggests, process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete for example the production of shoes from leather goes through cutting, stitching and policing processes.
To choose:
The situation better suited to job order costing than to process costing
Answer to Problem 1MC
B. The Costs are easily traced to a specific product
Explanation of Solution
Explanation for correct answer:
Job order costing is better for the situation when the Costs are easily traced to a specific product. Hence the correct option is B.
Explanation for incorrect answers:
A. Job order costing is not better for the situation when each product batch is same. Hence this option is incorrect.
C. Job order costing is not better for the situation when costs are accumulated by a department. Hence this option is incorrect.
D. Job order costing is better for the situation when the Costs are easily traced to a specific product. Hence this option is incorrect.
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- Which of the following statements is true? a. Job-order costing is used only in manufacturing firms. b. Process costing is used only for services. c. Job-order costing is simpler to use than process costing because the recordkeeping requirements are less. d. The job cost sheet is subsidiary to the work-in-process account. e. All of these.arrow_forwardJob-order costing works well whenever a. homogeneous products pass through a series of processes and receive similar doses of conversion inputs and different doses of material inputs. b. homogeneous products pass through a series of processes and receive similar doses of materials, labor, and overhead. c. heterogeneous products pass through a series of processes and receive different doses of materials, labor, and overhead. d. material cost is accumulated by process and conversion cost is accumulated by process.arrow_forwardIn a normal costing system, the cost of a job includes a. actual direct materials, actual direct labor, and estimated (applied) overhead. b. estimated direct materials, estimated direct labor, and estimated overhead. c. actual direct materials, actual direct labor, actual overhead, and actual selling cost. d. actual direct materials, actual direct labor, and actual overhead. e. None of these. Job-order costing requires the use of actual, not normal, costing.arrow_forward
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