Job Order Costing Process Costing and Activity Based Costing

Job Order exist do Costing and action mechanism Based CostingA hail explanation remains is the sum manners and techniques use by telephone linees allowing them to track resources consumed in production and statistical distribution of armed services or goods to consumers. These methods and techniques ar utilize by the management in fragment to evaluate and reward staff performance, by employees in order to manage recourses efficiently while the cost accounting system system is to a fault apply for external reporting requirements signification balance sheets and income statements. The cost accounting system is usually intentional to meet particular needs of respective(prenominal) companies, for that reason there be three main systems taskes apply harmonise to their needs.Job Order Costing is a cost system used to accumulate cost of projects also called micklees. Job order be is used when individual production centres or incisions drub on a mixture of product s rather than one king of a product during a specialized result of time. Prime costs and particularory viewgraph costs ar the two categories of production costs monitored with this method. dish costing is a case of costing system used for production of small identical, low-cost items. Process costing averages the costs and micklet be directly traced to individual products.Activity establish costing (ABC) is designed to accord costs to activities. This method has sound popular be produce of the fact that the complexity of businesses keeps growing and so does their need to assign increasingly large indirect costs to the appropriate department or activity. ABC is the lick where costing is assigned based on the cause and effect relationship between costs and activities that drive costs.What ar major(ip) objectives of a cost accounting system in a hospitality establishment?Within hospitality establishments cost accounting systems help successfully achieve the following manageme nt objectivesMeasuring the various needs and generated revenues of departments observe and controlling the progress of distributively departmentDepartment related info gathered is used to evaluate costs and make proper adjustments and department of corrections in operating proceduresWhat atomic number 18 the major objectives of a cost accounting system system in a manufacturing company?In manufacturing and service companies cost accounting systems help achieve the following management objectives. They supply the managers with helpful discipline regarding planning, cost control procedures and determining unit production costs. In most cases manufacturing companies also use a complete assembly line cost sheet which contains Cost Summary and Unit Cost information since manufacturing costs be non immediately save as menses period expenses. These information include total and costs per unit for plow materials, which are the raw materials used in production which costs are dire ctly attributable throughout the product manufacturing movement.Direct labour, which are the remuneration and early(a) pay roll costs of employees whose efforts are directly traceable throughout the product manufacturing work.Manufacturing overhead, is the category including all other manufacturing costs handle utilities aside for the above mentioned ones.What are the procedures in job order costing, routine costing and activity based costing.Job order costing process is a specific set of events which entrust usually occur with each job. Generally the process is as follows an order (or barter order) is received for the batch of products, a production order is issued from the sale order materials and labour are ordered and tracked for the set of products, manufacturing overhead is allocated to the job using a predetermined rate (usually per labour or per machine hour). In fact manufacturing overhead ordain not affect the work in process account instead it is changed to a c ontrol account. Direct labour and materials are charged by the accountant to the work in process accounts using the actual quantity acquired. These quantities are all tracked using a job costing sheet which will likely be already a computerized ledger and use used for each job. Spoilage which surpasses expect levels based on the job at hand is considered a period cost and is reclassified from work in process account into a separate account so it can be addressed by the management.Process costing procedures follow specific procedures and while exact procedures may take issue between unalike companies and businesses, but they generally follow these steps.While other types of costing are initiated when a sale order is issued, a sale order is not required for process costing as it is a continuous process.The work in process accounts are separated departments and are named according to the department they reflect on e.g. Work in process- FB department.The premier department in the pro duction process makes the first entry into the work in process account, generally for the raw materials.While the products move from department to department entries are made to each work in process account of each department.Direct labour costs are preserve at each period.Actual overhead costs are recorded no contra-account in needed because there is no over- or under-applied overhead cod to the actual costs being applied.Indirect costs are applied to the overhead account in actual amounts.Activity based costing procedures can be more complicated to set up and operate than other costing systems. The activity based costing procedures areOnly if a cost driver cant be accepted a cost can be assigned on an allocative basis. cerebrate cost pools are assigned to an overhead rate on costs drivers.Cost pools are used to assign costs the basis depends on the business and industry.Costs can be assigned to units, batches or products.These pools can be combined to look at facilities, divisi ons, or other levels of cost classifications.Costs can then be evaluated in order to view how and where they are occurring, knowing this the management can discern what cists are controllable and how they arise.Which costing methods (job order costing, process costing and activity costing) are trump suited to the following businesses and whyOld Home Bakery, Inc (a bakery that produces to order) It will be able to use job order costing because it is designed for businesses which work with orders rather than mass production.Apache Oil and Gas Refinery Because the products are alike(p) or identical the process costing is the appropriate method the business should apply. It is also recommended because the company uses an automated continuous process.The Sea View fall behind Hotel the hotel is best recommended to use the job order costing because it offers services and the method is designed for such businesses.Willie Wonkers Chocolate Factory because the business produces a banal item which units are identical it is best to apply the process costing method.Harris and Harris Law Firm Since this business offers services in the form of sub judice counselling or legal representation is it best to use the job order costing which refers to a desired unit which might not be identical to another offered service.Explain and evaluate last in first out, FIFO and AVCO techniques.last in first out stands for last-in first-out what means that recent purchases will be stored recorded and exchange before the items that already existed in stock when the purchase was received. LIFO valuation is permitted due to the belief that an ongoing business does not realize an economic clams only from largeness. When prices are uphill they must replace the inventory soon being sold with items oh higher prices. It also matches better current cost against current revenue and defers paying taxes on phantom income arising exclusively from inflation. LIFO is preferred by businesses be cause it delays a major negative effect of inflation higher taxes.FIFO is the most commonly used method used by businesses to record the value of inventory. It is appropriate when dealing with many different batches of similar products. The method assumes that the next item that will be purchased will be placed at the end of the line of to-be-sold items of that kind meaning what was purchased first will be sold first. In an economy of rising prices (during inflation), it is common for new companies to use this method to report the value of intersection to boost their balance sheet. While the older and cheaper good are sold the new and more expensive goods remain as assets in the businesss books, pecuniary statement boosted by FIFO also increase the chances a business has to get a loan.AVCO is used to establish the value of an inventory by calculating the costs of units. In practice it provides us the results we want by dividing the total cost of good available for sale with the num ber of items for sale.