ACCT1022 Lecture Notes - Lecture 5: Scott Paper Company, Beverage Industry, Mass Customization
Document Summary
The most basic determinant of cost allocation systems: the nature of the product/service generation process. Cost allocation system generally a mixture of two types: job costing and process costing. Job costing is used for distinct products or services: in the service sector audit and consulting engagements, ad campaigns, legal cases, in merchandising individual mail orders at ll bean, in manufacturing aircraft manufacture. Process costing is used for masses of indistinguishable products or services: oil refining, chemical processing, beverage production. Intermediate types of production processes: jobs, batch, assembly line, mass customization, continuous flow. Which of the following companies would be likely to use job-order costing rather than process costing: scott paper company for kleenex, architects, heinz, caterer for a wedding reception, builder of commercial fishing vessels. An example of how product cost is tracked in the accounting system inclusive of direct material, direct labor and overheads. Most commonly used allocation bases in practice: direct labor, machine hours.