To write a REPLY post to GIVEN ANSWER. Minimum 350 words. Due in 8 hours.

To write a REPLY POST to GIVEN ANSWER. Minimum 350 words. Due in 8 hours.

You can agree or disagree with given answer.

Question:

Search the Internet and find the website of a manufacturing company that you think is using a Process Cost Accounting system. Identify and discuss the specifics about your uniquely selected company that indicates it is using Process Cost Accounting. Each company may only be selected once (i.e. once a student selects a particular company, that same company may not be selected by another student).

Do not use any direct quotes and/or cut and pasted information (i.e. your discussion is to be 100% your thoughts, ideals and insights).

GIVEN Answer:

Process cost accounting system is completely different to Job order cost accounting. The difference between these two cost accounting systems that job order costing is used when unique products are being produced and ordered by customers. On the other hand, process costing is used when manufacturers produce in mass or bulk which leads to economies of scale. The cost per unit is reduced because products are produced in batches. The manufacturing costs are assigned to the units produced in the process.

A company that is a great example for following the process costing accounting system is Coca Cola. Coca Cola is one of the largest corporations that produces its products in batches and distributes them to retailers. They produce in thousands if not millions of cans a day and for that reason, they follow a mass production scheme. In Coca Cola, there are expenses that need to be taken into the assigning costs of the manufacturing process; this includes the direct materials, direct labor and factory overhead costs. In a mass production scheme, the cost per unit is low compared to a uniquely design product ordered by the customer. The costs associated with manufacturing process are categorized into 3 different parts; concentrate and syrup manufacturing, blending and packaging. There are major benefits of using the process cost accounting system such as the flexibility of the manufacturing process and inventory control. This will allow the company to produce according to the raw materials purchased. In addition, Coca Cola has proved to be a successful corporation controlling its differentiation and pricing. Therefore, the 3 stage process of assigning and allocating manufacturing costs in a batch production process reduce lower cost per unit. However, there are also disadvantages in using a process accounting system. One of them is the difficulty to determine the production costs. Since it’s difficult to assign the exact production costs, the company could experience low profits. However, measuring and monitoring the performance in every department is crucial for the controlling of production.

As a result, Coca Cola has established itself in a very good market position. Since they produce in bulk and affordable prices, the process cost accounting system is a strategic approach for their success.