Forbes has identified the best-performing public companies in the U.S. with sale

Question

Forbes has identified the best-performing public companies in the U.S. with sales under $1 billion. Access the list at http://www.forbes.com/best-small-companies/ (Opens in a new window. Plain text: http://www.forbes.com/best-small-companies/ ). Identify three companies on the list that would most likely use job-order costing systems. Write a brief summary (one paragraph) about each of the three companies. The summary for each should include the name, website address, and a brief description of its business, and set forth the reasons why the company would most likely use a job-order costing system. (You should provide the appropriate citation(s). If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm. Opens in a new window. Plain text: http://www.cod.edu/library/research/citenet.htm)

Explanation / Answer

Three companies on the list that would most likely use job order costing systems are:

(i) Name - Big Ass Fans. webiste address - www.bigassfans.com

Brief description of business - The company is in the business of making and selling products like fans, automated lights, home heating and cooling systems. It also makes LED light fixtures.

Reasons why the company would most likely use a job-order costing system - Job order costing system is used by companies to assign manufacturing costs to either individual products or to batches of products. Now, Big Ass Fans are likely to use job order costing as their products are sufficiently different from each other (heating and cooling systems are not identical to LED fixtures and hence products are sufficiently different). A job cost record will be created for each product so as to determine the production cost of each item.

(ii) Name - Abt Electronics. website - www.abt.com

Brief description of business - The company is a manufacturer of consumer goods and appliances. Its products are (a) kitchen appliances like cooktops, microwaves, refrigerators, warming drawers (b) laundry appliances (c) outdoor appliances like BBQ grills (d) home solution appliances like air conditioners, sump pumps, paper shredders (e) television (f) electronics like cameras, computers, GPS devices, phones (g) watches, sunglasses and luggage

Reasons why the company would most likely use a job-order costing system - Job order costing system is used by companies to assign manufacturing costs to either individual products or to batches of products. Now, products being made by Abt are as different as chalk and cheese. Its range varies from luggage and sunglasses to appliances. The product categories are different and the manufacturing costs will be assigned job wise for each category.

(iii) name - Balsam Brands. website - http://www.balsambrands.com/

Brief description of business - The company designs and sells home decor and consumer products. Products being made are cristmas trees, garlands, ornaments etc.

Reasons why the company would most likely use a job-order costing system - Job order costing system is used by companies to assign manufacturing costs to either individual products or to batches of products. Now, products like ornaments are very much different from products like christmas tree. As products are different, job order costing will be used to create a job cost record for each item.

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