Consider the following scenario:Your CFO, in her initial work, needs to decide whether to set up a...

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Consider the following scenario:Your CFO, in her initial work, needs to decide whether to set up a job order costing system or a process type costing system. She has asked you to make a recommendation based on the following information. You plan to meet with her in the morning. Write 3 paragraphs in response to the following, and provide support for your recommendation:1. Compare and contrast job order costing to process costing methods.2. What kind of system works best in what kinds of companies?3. What kind of system makes sense for your company, given that you plan to start with only one version of your product but at some point in the future may offer a variety of options?
	
Document Preview: Consider the following scenario:Your CFO, in her initial work, needs to decide whether to set up a job order costing system or a process type costing system. She has asked you to make a recommendation based on the following information. You plan to meet with her in the morning. Write 3 paragraphs in response to the following, and provide support for your recommendation:Compare and contrast job order costing to process costing methods.What kind of system works best in what kinds of companies?What kind of system makes sense for your company, given that you plan to start with only one version of your product but at some point in the future may offer a variety of options?

David · Accepted Answer

Job Order Costing & Process Costing 
Process costing is an accounting technique that identifies and accumulates direct costs and 
allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in a 
large batch, which might include an entire month's production. It is useful in the production of 
goods which are manufactured by using various processes. Job costing is the process of tracking 
the expenses incurred on a job against the revenue produced by that job.  Job costing is an 
important tool for those who are charging relatively high dollar value per customer with a 
relatively low number of customers.

Consider the following scenario: Your CFO, in her initial work, needs to decide whether to set up a job order costing system or a process type costing system. She has asked you to make a...

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