COST ACCOUNTING
JOB ORDER COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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will be used when a product of one process becomes the material of another process
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will be used in areas such as hotels, transport and entertainment where an actual product is not made
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will be used to determine a break-even point
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will be used when work consists of different products each time, made to meet customer’s specific needs
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Detailed explanation-1: -Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculate the cost for doing an individual job.
Detailed explanation-2: -Businesses use job order costing for small batches of customizable or unique products and individual job orders, while businesses use process costing for mass-produced or standardized products. Typically, in process costing, the products produced are the same or very similar.
Detailed explanation-3: -Thus, a job order cost system is used for custom jobs when it is easy to determine the cost of materials and labor used for each job. A process cost system is often less expensive to maintain and works best when items are identical and it is difficult to trace the exact cost of materials and labor to the final product.
Detailed explanation-4: -Answer and Explanation: The answer is option A, a health care clinic. A health care clinic would most likely use a job-order costing system as it offers unique and specialized services to its clients.