Topic: Hybrid Costing System

Class : BS 3rd Semester

Discipline: Accounting and Finance
Institute : Govt. College of
Commerce, Qasimpur
Colony Multan
Course: Cost Accounting (ACC207)
Instructor: Ghulam Haider
Hybrid Costing System
A hybrid costing system is a cost accounting system that includes
features of both a job costing and process costing system. ...
A consideration when using a hybrid system is the added cost of using
essentially two different cost tracking systems, rather than a single cost
tracking concept for all operations.
 The two main costing methods that cost accountants and managers use to
measure production costs are process costing and job costing. Process costing
looks at the cost of mass-producing identical units. Since the jobs are the
same, process costing looks at actual cost of each manufacturing step.
 Job costing, on the other hand, is used for unique and custom products that
are produced at low volumes.
What Does Hybrid Costing System
Mean?
Ideally, every manufactured product would
fall into one of these two cost systems.
Sometimes this isn’t the case. Some products
are mass-produced and can be customized to
order. In this case, cost accountants use a
hybrid costing system.
Example

 A hybrid costing system uses elements of both the

process costing and job costing systems to analyze the
cost of producing a product. Take a Honda
motorcycle for example. The motorcycle model itself
is mass-produced. This makes the bike a likely
candidate for the process costing system. The only
problem is that each Honda motorcycle can be
completely customized with hundreds of different
parts and paint schemes. Since each bike is custom
order, the job costing system can also be used.
Example( Continued)

 In this case, cost accountants and managers

would most likely use a hybrid costing system to
track the manufacturing expenses of producing a
motorcycle. Process costing systems would be
used for the mass produced parts like the bike
frames. Where as, job costing systems would be
used for the customized parts and custom
assembly processes on each motorcycle.