Overview: Different costing methods provide companies with different options for categorizing and calculating costs. Managers and cost accountants should understand the differences between costing methods so that they can choose and properly implement the method that best suits their needs for decision making. For this short paper, you will compare the characteristics of job costing and process costing methods and give examples of when and why each might be used. You will also address the use and benefits of costing for service businesses. Prompt: Review Chapter 4 in the textbook and the Job Order Costing vs. Process Costing video to support your work on this short paper. Specifically, the following critical elements must be addressed:
- Job Costing vs. Process Costing: Characteristics: Compare the characteristics of job costing and process costing. Consider how each method impacts the accounting work involved.
- Job Costing vs. Process Costing: Example: Select a company of your choice and explain when they might use job costing and when they might use process costing. Cite your work and include sufficient detail.
- Service Industry Costing: Differences: Explain why costing methods used in the service industry are different from those used in the manufacturing or merchandising industries.
- Service Industry Costing: Benefits: Select a service industry company of your choice that uses costing and explain the benefits of costing for service companies. Cite your work and include sufficient detail.
Sample Solution
