BUSI 601 – ACCOUNTING FOR DECISION MAKING
September 19, 2014
“A job costing system is appropriate when most costs incurred for the job can be readily identified with a specific product, batch of product, customer order, contract, or project” (Blocher, Stout, Juras, & Cokins, 2013, p. 98). According to Blocher, Stout, Juras, & Cokins, “process costing is likely to be found in a firm that produces one or a few homogenous products or services.”
Hospitals and medical billing companies use job-costing methods. In this scenario, each patient or bill is considered an individual job. Retail companies and clothing producers such as Reebok and Nike use job-costing methods as well. It’s used to track individual articles, broader styles and clothing by size. According to Andersch, Buehlmann, Palmer, Wiedenbeck, & Lawser, “accurate and timely product costing information is critically important for companies in planning the optimal utilization of company resources”. Dosch, J., & Wilson, J. states “In a process manufacturing environment, raw materials, labor, and overhead placed into production need to be allocated to inventory. Given the difference in the ability to trace input costs of these two methods, the valuations of work-in-process and finished goods inventories differ significantly.”
The Coca-Cola Company is one of the world’s largest producers of nonalcoholic beverages. According to Coca-Cola, more than 11,000 of their soft drinks are consumed every second of every day. Coca-Cola uses a mix of direct materials water, refined sugar, and secret ingredients to make the liquid for their beverages. The second stage includes the filling, cleaned and sanitization of bottles before placing a cap on each bottle. In the third stage, the bottles that are filled are labeled, inspected, and packaged.
Work in process begins with the first stage of production (mixing and blending), continues with the second stage (bottling), and ends with the third stage (inspecting,...