Job Order Costing

Question 1

What are the advantages of Job Order Costing

Answer 1

1. more precise in assignment of costs to projects than process costing
2. provides more useful information for determining the profitability of particular projects and for estimating costs when preparing bids for future jobs

Question 2

What are disadvantages of a Job Order costing

Answer 2

1. requires a lot of data entry
2. time consuming
3. if data is not entered correctly then product costs are not correct (can use bar coding to help)

Question 3

What are some common problems with all costing systems?

Answer 3

1. how to allocate overhead to finished product
2. overhead often represents more than 50% of a product’s cost, this cost is often difficult allocate meaningfully
3. if its not allocated meaningfully, then the product costing info is not useful

Question 4

How do you report the job cost data?

Answer 4

use a COGM schedule

Question 5

What do service companies use for job order

Answer 5

focus on direct labour and overhead