Please describe a business in the US that can an be applied in job order costing

Question

Please describe a business in the US that can an be applied in job order costing or process costing in Managerial Accounting. You are to think of a business that you know either as an employee or consumer. Should they use process costing or job order costing and which method of overhead allocation would best serve this business. It does not have to be a manufacturing business as these concepts can be applied to service businesses. Please describe the business you are looking at and which methods they should adopt.

Explanation / Answer

job order costing: Is used to producing products or services which are individual in nature or in batch wise production. the cost is assigned to it and considered it as individual and unique product/service. These products or services are unique and different in nature, no to products carries the same characteristics. For example: Movies, Law related cases etc. when it comes to Movies, the cost is divided as cost for dicrec material like costumes, customs, film etc, and direct like actors and actress, other character artists, director, other technicians etc, considered the budget for each film as cost sheet. Once the movie making and revenue collection is over, then the profit or loss from the unit can be calculated. Even movie industry in US or in any other country is following the same pattern.

Process costing: It is the method of costing where the costs are assiened to the unts based on its production in a company, which produces large quantities of similar or homogeneous products. It is also called as operation costing, where the costs are assigned to a product based on its stage wise, process wise and the stage of manufacturing level. For example TESLA- the electric car producer, this firm follow process costing only.

These units are similar and the cost associated to producing are same. It includes purchase of materials, process of the materials, adding some components and some technical aspects to the product and produce as batch wise. most of the manufacturing units follows this costing.

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