RUNNING HEAD: JOB COSTING METHODS 1
Discussion Board: Discussion Thread: Job Costing, Process-Costing, and Activity Based Costing
David S. Saunders
School of Business, Liberty University
Acct 521 Advanced Cost Accounting
Dr. Jacent Gayle
September 9, 2025
Job order costing: Boeing Company
Boeing Company would be an example of a company that would use job order costing.
Boeing Company is an American aerospace company that manufactures commercial jets (Amir
& Weiss, 2025). The company also manufactures military aircraft, helicopters, space vehicles,
and missiles (Amir & Weiss, 2025). The company’s business units are organized around three
main groups of products and services: commercial airplanes, military aircraft and missiles, and
space along with communications (Amir & Weiss, 2025). Boeing’s military-related activities
are involved with the designing, manufacturing, and support of fighter aircraft, bombers,
transport aircraft, helicopters and missiles (Amir & Weiss, 2025). Boeing’s space and
communications division manufactures launch vehicles, in-space-solid-rocket boosters, rocket
engines for its launchers and other vehicles (Amir & Weiss, 2025). The company also makes
satellites.
“Job order costing is a costing system that assigns costs to products and or services a
company provides” (Vipond, 2025). This process is used to obtain an approximation of costs in a
timely manner (i.e. manufacturing overhead costs) (Vipond, 2025). Boeing would use this
process to manufacture its products for its customer base. The company, as mentioned before,
manufactures commercial as well as military aircraft, and these aircraft are built to meet the
requirements of its customers. This process allows Boeing to track costs on each aircraft it
manufactures. This process will account for materials, labor, and overhead expenses per each
order the company receives.
Process Costing: Coca Cola Company
The Coca-Cola Company is an example of a company that would use process costing.
Coca-Cola manufactures and sells soft drinks and citrus beverages (Editors of Encyclopedia
Britannica, 2025). The company is the largest beverage manufacturer and distributor in the
world. “Process costing is an accounting method used by businesses to determine the cost of
mass-produced, identical products or services” (AccountingInsight Team, 2025). This method is
used by organizations that are engaged in continuous production processes (AccountingInsight
Team, 2025). This system tracks and allocates expenses across large volumes of uniform items,
and this allows businesses to accurately assess production costs for standardized goods
(AccountingInsight Team, 2025).
Coca-Cola would use this process when it produces Coca-Cola, Diet Coke, Minute Maid
Orange Juice, and the other types of beverages it produces as well. All these beverages are
produced in mass quantities via a standard manufacturing process. By using this method,
CocaCola can average its production costs throughout the entire manufacturing process of its
products. This process is very helpful in determining the cost per unit of its products.
Activity-based costing: The Ford Motor Company
The Ford Motor Company would be an example of a company that would use
activitybased costing. The company manufactures vehicles and trucks, as well as parts for its
vehicles (Schepp, 2024). The founder of the company Mr. Henry Ford instituted the use of the
moving assembly line, that is used in the manufacturing of vehicles (Schepp, 2024). Ford is one
of the original car manufacturers, and Mr. Henry Ford invented the Model T in 1908.
Activity-based costing (ABC) is defined as “a more specific way of allocating overhead
costs based on activities that contribute to overhead costs” (Schmidt, 2025). It differs from
joborder costing and variance analysis, as overhead costs are applied based on a specific cost
driver such as labor or machine hours (Schmidt, 2025). An activity-based costing example would
be an event, a task, or unit of work that has a specific purpose (Schmidt, 2025). Some examples
would be the design of a product, the setting up of a machine, or the distribution of products
(Schmidt, 2025). This process looks at all potential activities and it does not rely on one variable
(i.e. labor or machine hours) (Schmidt, 2025). This process is normally used in a manufacturing
environment, as it produces accurate cost data, as well as generating values that are close to
the true costs, and it can be identified during the production phase (Schmidt, 2025). This
process also is useful with target costing, product costing, product line profitability analysis, and
service pricing (Schmidt, 2025). Finally, this process is used to look at a company’s true costs
and then develop a plan for pricing to ward off unnecessary expenses (Schmidt, 2025).
Ford Motor Company manufactures different models of vehicles such as the Ford
Mustang, Ford F-150 truck, Ford Expedition XL SUV, the Lincoln Aviator, and the Lincoln
Navigator. Each vehicle has different features and the process of producing them is different as
well. This is why average-based costing is very beneficial to Ford. This process is very efficient
with respect to the allocation of costs, so that the company can analyze the profitability of each
vehicle line.
Comparisons and differences
Boeing and Ford both manufacture customized products (planes and vehicles), but both
companies use different costing methods as indicated above. Boeing used job order costing as
they manufacture custom specific products for its customers. On the other hand, Ford uses
average-based costing to deal with the various vehicles that are manufactured. Coca-Cola
produces beverages with a standardized process and process costing works for them.
With respect to batch size, Coca-Cola and Ford both produce products in large
quantities, but they both use different costing methods. As mentioned before, Coca-Cola uses
process costing, and Toyota uses average-based costing. The main difference is that Coca-Cola’s
products are standardized, and Ford produces different products that require a precise method
of cost allocation.
With respect to cost allocation, Boeing and Ford both use cost methods that involve a
detailed allocation of costs. Boeing does this by allocating costs to each aircraft order or the
other items it manufactures. Ford allocates costs that are based on various activities, and their
products are mass produced. Both methods that are used by both companies allow them to
analyze the profitability of the individual products or orders that both companies have.
With respect to customization and complexity, Boeing and Ford both deal with
customization and various complexities in their products, but different methods are used by
both. Boeing uses job-order costing to analyze the products they manufacture as they are low-
quantity products, and process costing is more applicable for companies that manufacture
standardized products that are manufactured or produced in large quantities. Activity-based
costing is applicable to companies that have complex operations and diverse product lines.
REFERENCES
AccountingInsights Team. (2025, Aug. 16). What is Process Costing? Definition, How It
Works and When to Use It. Retrieved from: https://www.accountinginsights.org/what-
isprocess-costing-definition-how-it-works-when-to-use-it/.
AccountingInsights Team. (2025, Aug. 16). Which Companies Use Process Costing?
Retrieved from: https://www.accountinginsights.org/which-companies-use-
processcosting.
Editors of Encyclopedia Britannica. (2025). The Coca-Cola Company. Retrieved from:
https://www.britannica.com/money/The-Coca-Cola-Company.
Schepp, D. (2024, Jan. 24). Timeline: The History of Ford. Encyclopedia Britannica. Retrieved
from: https://www.britannica.com/topic/Timeline-The-History-of-Ford.
Schmidt, J. (2025). Activity Based Costing. Retrieved from:
https://www.corporatefinanceinstitute.com/resources/accounting/activity-based-
costing/.
Vipond, T. (2025). Job Order Costing Guide. Retrieved from:
https://www.corporatefinanceinstitute.com/resources/accounting/job.order-costing-guide/.
