Multiple Choice
Which type of costing system would a service company most likely use compared to a merchandising company?
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4. Merchandising Operations
Service Company vs. Merchandising Company
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following differs between job costing and process costing?
A
The use of financial statements
B
The method of accumulating and assigning costs to products
C
The requirement to follow Generally Accepted Accounting Principles (GAAP)
D
The need to record cash receipts and disbursements
Verified step by step guidance1
Understand the key difference between job costing and process costing: Job costing assigns costs to specific jobs or projects, while process costing accumulates costs for continuous production processes and assigns them to units of output.
Recognize that the use of financial statements, adherence to GAAP, and recording cash receipts/disbursements are common requirements for both costing methods and do not differ significantly.
Focus on the method of accumulating and assigning costs to products, as this is the primary distinction between job costing and process costing.
In job costing, costs are tracked for individual jobs or batches, often using job cost sheets to record direct materials, direct labor, and allocated overhead for each job.
In process costing, costs are accumulated by department or process for a period of time and then averaged over all units produced, often using production reports to assign costs to units based on equivalent units of production.
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