Multiple Choice
Which of the following differs between job costing and process costing?
26
views
4. Merchandising Operations
Service Company vs. Merchandising Company
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
For which of the following businesses would the job order cost system be most appropriate?
A
A gasoline station
B
A custom furniture manufacturer
C
A fast-food restaurant
D
A grocery store
Verified step by step guidance1
Understand the concept of a job order cost system: This system is used to allocate costs to specific jobs or orders, making it ideal for businesses that produce unique or customized products rather than mass-produced items.
Analyze the nature of each business option provided: A gasoline station, fast-food restaurant, and grocery store typically deal with standardized products or services, which are better suited for a process costing system rather than a job order cost system.
Consider the characteristics of a custom furniture manufacturer: This type of business produces unique, customized furniture pieces based on individual customer orders, making it a perfect candidate for a job order cost system.
Relate the job order cost system to the custom furniture manufacturer: Costs such as materials, labor, and overhead can be tracked and assigned to specific furniture orders, ensuring accurate cost allocation and pricing.
Conclude that the job order cost system is most appropriate for the custom furniture manufacturer because it aligns with the need to track costs for individual, customized jobs.
Related Videos
Related Practice
Service Company vs. Merchandising Company practice set
Problem sets built by lead tutorsExpert video explanations