Job Order and Process Costing a. Select two (2) of the following types of compan

Question

Job Order and Process Costing a. Select two (2) of the following types of companies and explain whether each would use job order or process costing. Be sure to explain and support your answers 1. 2. 3. 4. A law firmm An oil refinery A soda manufacturer A custom-home builder b. For each of the two types of companies you selected from above, provide an example of each of the following costs your selected companies might incur. Fully explain your examples. 1. 2. 3. 21 Direct material Direct labor Manufacturing overhead Selling and administrative expense

Explanation / Answer

a. Process Costing - A soda manufacturer

Direct material - Carbonated water, Sugar, Bottles

Direct labor - wages paid to factory labor

Manufacturing overhead - Salaries paid to production supervisor, depreciation expense, electricity expenses of factory.

Selling and administrative expenses - Sales commission, Accounting staff wages and benefits.

b. Job Costing - Custom - home Builder.

Direct material - Bricks, cement etc., Cost of the equipement bought for a specific a specific job would become direct material for that job.

Direct labor - wages paid to people actually constructing the building, salaries paid to the persons especially employed to bulild a specific home.

Manufacturing overhead - Depreciation expenses on the equipment used in construction.

Selling and administrative expenses - Sales commission paid to agent who brought the construction contract, Accounting staff wages and benefits.

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