It differs from Process costing in that the flow of costs is tracked by job or batch instead of by process. The distinction between job costing and process costing hinges on the nature of the product and, therefore, on the type of production process:
Describe the nature of your chosen method. What types of organizations should choose that method? How is this method different from the costing methods you did not choose?
Use your selected costing method to create a real-life business management scenario that includes realistic numbers. What management decisions may one make based on your scenario?
How might each of the cost systems be implemented within this particular industry? Does an industry exist in which the job order and the processing cost systems would not be suitable?
The company's two support departments, Purchasing and Human Resources, are currently allocated amongst its three manufacturing departments: Laminating, Fabricating, and Assembling. Currently, the support department's costs are divided equally among the three manufacturing departments.
The company has conducted an analysis using the number of employees in the manufacturing departments as the activity driver. As a manager, would you suggest the firm adopt the new activity-driven allocations or retain the current allocation method?
Choose a method of allocation and provide your rationale. Identify at least two additional cost drivers that could be used to allocate the costs of the two support departments and explain the rationale you used to select the additional cost drivers.
Why did you pick this costing system? Recommend another costing system to consider.
Provide your rationale for your recommendation. This means that I will track the cost of each customer order the "jobs" and put the cost of the materials and labor that are associated with that job as a direct cost. Then, with common costs, the overhead costs of production, I will allocate them to the jobs based on a cost driver that is most causally related to the overhead pool costs.
This is different from process costing and activity based costing because process costing does not separate job costs, all costs are co-mingled and spread to output evenly for each unit cost per unit is the same for all produced units.
With activity based costing, I would use more than one overhead pool to allocate overhead to the jobs. Here is the job cost for my floral business for the most recent month:Product costing is the process of recording and allocating expenses, which are incurred in the process of producing and selling a product, to the respective products.
It is done to enable the company to valuate the inventory and for various internal and external reporting requirements. Process. Activity-based costing is no longer a complex, expensive financial-systems implementation; the time-driven ABC innovation provides managers with meaningful cost and profitability information.
In addition to ‘job costing’ and ‘process costing’ systems, some businesses have developed unique costing systems that are hybrids between both costing systems. Another increasingly popular type of costing system is known as ‘activity-based costing,’ or ‘ABC.’. Activity Based Costing (ABC) adalah costing system yang menjadikan aktivitas individu sebagai dasar cost object-nya.
Konsep ABC menganut sistem hubungan sebab – akibat antara pemicu biaya (cost driver) dan aktivitas/activity center si @ Total alokasi OH = Rp Activity Based Costing = Rp.
what is activity-based costing? In contrast to traditional cost-accounting systems, ABC systems first accumulate overhead costs for each organizational activity, and then assign the costs of the activities to the products, services, or customers (cost objects) causing that activity.
Summary. Activity Based Costing ("ABC") is an approach to solve the problems of traditional cost management systems which are often unable to determine accurately the actual costs of production and of the costs of related services.