Topic 1: Product Costing Systems|
Discuss the two alternatives for product costing systems. Be sure to address the following:
Professor and class,
* How do the two systems differ?
The two alternatives for product costing systems are job and process. The two differ in that with job costs these are specified for a particular job. Process costs go by each process that is done (Kinney & Raiborn, 2013, p 150). * What are the characteristics of the companies that would use each? The characteristics of the companies that would use either a job-related system or a process system would be determining how many of the products would be made at the same time. For instance an apple factory would use a process system where a job-related system would be a company that does tax returns (Kinney & Raiborn, 2013, p 150). * Describe the three valuation method alternatives.
The three valuation method alternatives are: actual, normal, or standard. The Actual cost systems assign the actual costs of direct material (DM), direct labor (DL), and overhead (OH) to Work in Process (WIP) Inventory. A normal cost system that combines actual direct material and direct labor costs with predetermined overhead rates. Standard cost system a valuation method that uses predetermined norms for direct material, direct labor, and overhead to assign costs to the various inventory accounts and Cost of Goods Sold (Kinney & Raiborn, 2013, pp 151 & 816). * Explain why Washburn Guitar uses job-order costing and the costs Washburn tracks. Washburn Guitar uses job-order costing because each guitar they make is custom ordered. The main costs track for these types of projects are associated with direct materials and direct labor. Lisa Richardson
Kinney, M. & Raiborn, C. (2013).Cost Accounting Foundations and Evolutions, 9th Ed. Mason, OH: South-Western Cengage Learning...