Professional Documents
Culture Documents
Advantages
Offers better understanding and justification of costs in manufacturing overhead
Determines product profit margins more precisely
Disadvantages
Activity Based Costing is not useful to small companies
If the overheads are relatively small, there is no use of Activity Based Costing
1b. The job order costing is used for the costing of products that are more unique and
customizable. This is usually applied to small production orders while the process costing is
used for the costing of more standardized products that are usually produced in large volumes.
*In job order costing the costs are ascertained for each job individually, and as each job is
independent of the other no transfer of costs is needed while in process costing costs need to
be transferred from one process to the other.
1C.
Beginning work in process. 120,000 units
Start in production. 1110000 units
Total units. 1230000 units