AFL_Week_6_Discussion

Cost accounting is a method through which manufacturing firms evaluate the profitability and inventory value of their products as well as help in cost control. The accounting system has two types of costing namely job order and process costing. In week three, we learned about job order costing where it was described as an accounting system that separately accumulates the manufacturing cost for each job. In week four, we learned about process costing which unlike job order it accumulates costs differently for each process. The purpose of this assignment is to identify a publicly traded manufacturing company, the products it deals with and finally discuss the type of cost accounting used.

A publicly traded manufacturing company refers to a company that has stock traded on an exchange such as the New York Stock Exchange. For instance, Building Materials and Construction Solutions (BMCH) is a publicly-traded manufacturing industry in the U.S. founded in 1987 with its headquarters at Raleigh. The company has over 10000 workers. This company deals with the manufacture of building materials, distribution of the materials to different suppliers and end users, and also provides construction services.

For cost accounting, Building Materials and Construction Solutions Company uses job order costing method due to the nature of products dealt with. This is because the company not only deals with one product but a variety of products. For instance, the roofing materials are differently manufactured from floor and framing materials. Job order costing best suits this company because the firm has special orders and unique production which can only be performed with this accounting method. Job order costing ensures that all the costs incurred in each job are recorded and accounted for separately to evaluate the business performance and understand whether it's making profits or losses hence helping the management in decision making.

Reference

Guenther, E., Jasch, C., Schmidt, M., Wagner, B., & Ilg, P. (2015). Material Flow Cost Accounting–looking back and ahead.