The three costing methods:

JOB ORDER COSTING is used in situations where the company delivers unique or custom jobs
for its customers. Every customer is treated uniquely and delivered products to specifically suit
their individual needs. In job order costing, the company tracks the direct materials, the direct
labor, and the manufacturing overhead costs to determine the overhead (Job Order Costing -
Guide of How to Calculate Job Order Costs (corporatefinanceinstitute.com). 

PROCESS COSTING is the methodology used to allocate the total costs of production to
homogenous units produced via a continuous process that usually involves multiple steps or
departments (Walther, L.M. and Skousen, C.J. (2009) Managerial and Cost Accounting).

ACTIVITY-BASED COSTING attempts to divide production into its core activities, define the
costs for those activities and then allocate those costs to products based on how much of a
particular activity is needed to produced a product.  (Walther, L.M. and Skousen, C.J. (2009)
Managerial and Cost Accounting).

Given these descriptions of job costing and process costing, we can arrive at the following
differences between the two costing methodologies:

 The uniqueness of the product. Job costing is used for unique products, and process
costing is used for standardized products.

 Size of job. Job costing is used for very small production runs, and process costing is
used for large production runs.

 Recordkeeping. Much more record keeping is required for job costing since time and
materials must be charged to specific jobs. Process costing aggregates costs, and so
requires less record keeping.

 Customer billing. Job costing is more likely to be used for billings to customers since it
details the exact costs consumed by projects commissioned by customers (The
difference between job costing and process costing — AccountingTools).

While the difference between the traditional method (Job Order and Process Costing Method)
and the Activity-Based Costing Method is more complex than simply the number of cost drivers.
When direct labor is a large portion of the product cost, the overhead costs tend to be
consistently driven by one cost driver, which is typically direct labor or machine hours; the
traditional method appropriately allocates those costs. When technology is a large portion of
the product cost, the overhead costs tend to be driven by multiple drivers, so using multiple
cost drivers in the ABC method allows for a more precise allocation of overhead (Compare and
Contrast Traditional and Activity-Based Costing Systems – Principles of Accounting, Volume 2:
Managerial Accounting).

Overhead in Traditional versus ABC Costing

  Traditional ABC
Overhead Single cost driver Multiple cost drivers
assigned
Optimal usage When direct labor is a large portion of When technology is a large portion of
 Overhead in Traditional versus ABC Costing
  Traditional ABC
the product cost the product cost
Orientation Cost driven Process-driven

COSTING METHOD FOR WET SUIT WORLD:

In the Wet Suit World, the specific things to be considered is that the materials are the same for
all suits and undergo the same production and quality inspection process. Therefore, based on
my observation, the Process Costing is suitable for this manufacturing company. 

REFERENCES:

(Job Order Costing - Guide of How to Calculate Job Order Costs (corporatefinanceinstitute.com)

 (Walther, L.M. and Skousen, C.J. (2009) Managerial and Cost Accounting)

(The difference between job costing and process costing — AccountingTools)

(Compare and Contrast Traditional and Activity-Based Costing Systems – Principles of

Accounting, Volume 2: Managerial Accounting)