Concept explainers
Would the following companies most likely use a
Paint manufacturer
Identify whether the given company most likely to use a job order costing system or a process costing system.
Explanation of Solution
Job order costing: Job order costing is one of the methods of cost accounting under which cost is collected and gathered for each job, work order, or project separately. It is a system by which a factory maintains a separate record of each particular quantity of product that passes through the factory. Job order costing is used when the products produced are significantly different from each other.
Process Costing: Process costing is method of cost accounting in which all the costs that are incurred production process are recorded. Output of one process becomes input for next process. This method is used to apply cot to similar products that are mass-produced in uninterrupted manner.
The paint manufacturer most likely uses a process costing system.
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