DISCUSSION QUESTION...4HRS
Running head: BUSI 601 1
BUSI 601 3
The two types of costing systems can be can be described as cost-accumulation systems, which produce the unit manufacturing costs for a particular process (Anta & Jacob, n.d.). Focusing on job-costing and process costing systems, the job costing system is characterized by the accumulation of costs by contracts, orders and specific jobs (Anta & Jacob, n.d.). This type of system is mostly appropriate in situations where identifiable products are manufactured and collected in batches, or when items or products are manufactured according to the customer’s specifications. Therefore, job costing system is widely used in areas or fields where customization of products is mostly requested, for example, in printing, construction, vehicle manufacturing or repair, among other professional services. One of the major companies in Alabama, which utilize the job costing system and from which consumers highly rely on customization, is the Valley Printing Inc., based in Alabama which offers a wide range of printed products. Another business focused using the job costing system is the Golden Gear Automotive, which is an auto shop repair outlet.
On the other hand, the process costing is focused on manufacturing costs that are accumulated by similar products. This type of system, aggregates the cost of manufacturing based on departments or through the process of production. The total manufacturing costs are accrued based on two major categories, that is, conversion costs and direct materials, which also can be interpreted as the sum of direct labor and factory overhead (Kariyawasam, 2018). Process costing is therefore appropriate for industries which produce a continuous mass of product, usually in units, and through a series of operations. Some of the companies that use this system include beverage, food, tobacco, chemicals, plastics, and coal processing industries (Kariyawasam, 2018). Among the major companies using the process cost system, is the Pilgrim’s Pride Corp, which is a privately held food manufacturing enterprise. Another company is the Helena Chemical Corporation, a chemical manufacturing, which is involved in mass production that requires a process costing system for effective production of its products.
References
Anta, D. G., & Iacob, M. I. Job-Order Costing Versus Process Costing.
Blocher, E. J., Stout, D. E., Juras, P. E., & Cokins, G. (2019). Cost management: A strategic
emphasis (8th ed.). Boston, MA: McGraw-Hill.
Kariyawasam, H. (2018). A study of cost and management accounting practices in Sri Lanka’s manufacturing industry.