Question #1: Compare and contrast a job order costing system and a process costing system -...

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Accounting

Question #1: Compare and contrast a job order costing systemand a process costing system - include an example of when eachmight be used
Question #2: Explain in detail what the term "equivalentunits" means. How is it used in Accounting and/or what is itspurpose

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Question 1 Job Order Costing As youve learned job order costing is the optimal accounting method when costs and production specifications are not identical for each product or customer but the direct material and direct labor costs can easily be traced to the final product Job order costing is often a more complex system and is appropriate when the level of detail is necessary as discussed in Job Order Costing Examples of products manufactured using the job order costing method include tax returns or audits conducted by a public accounting firm custom furniture or in a comprehensive example semitrucks At the Peterbilt factory in Denton Texas the company can build over 100000 unique versions of their semitrucks without making the same truck twice Process Costing Process costing is the optimal costing system when a standardized process is used to manufacture identical products and the direct material direct labor and manufacturing overhead cannot be easily or economically traced to a specific unit Process costing is used most often when manufacturing a product in batches Each department or production process or batch process tracks its direct material and direct labor costs as well as the number of units in production The actual cost to produce each unit through a process costing system varies but the average result is an adequate determination of the cost for each manufactured unit Examples of items produced and accounted for using a form of the process costing method could be soft drinks petroleum products or even furniture such as chairs assuming that the company makes batches of the same chair instead of customizing final products for See Answer

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