08-21-2009, 04:08 AM
Dear
Process costing is typically used where production costs cannot be identified separately and allocated for/on individual production units. For example manufacturing of textile products, sugar, cement so forth and so on.
If this can be done, job order costing may be used. Examples could be air crafts, cars, plants, machines so forth and so on.
Goods produced in bulk and goods produced in specific numbers or against specific order may also be a decision making factor regarding the costing method to be used. The cost of a given product units may also be a factor.
If CPUs are produced in bulk without individual identification, or without having a specific order, PROCESS costing may be used to save resources being utilized in terms of time and effort.
However, if some one wishes and his cost benefit analysis allows him, the more appropriate costing method for CPUs should be job order costing.
Nevertheless, to me it appears that applying job order costing may require more inputs and efforts than the benefits of expected output.
I would say job order is more suitable but will also require more inputs which may not allow to follow it.
Regrads,
Kamran.
Process costing is typically used where production costs cannot be identified separately and allocated for/on individual production units. For example manufacturing of textile products, sugar, cement so forth and so on.
If this can be done, job order costing may be used. Examples could be air crafts, cars, plants, machines so forth and so on.
Goods produced in bulk and goods produced in specific numbers or against specific order may also be a decision making factor regarding the costing method to be used. The cost of a given product units may also be a factor.
If CPUs are produced in bulk without individual identification, or without having a specific order, PROCESS costing may be used to save resources being utilized in terms of time and effort.
However, if some one wishes and his cost benefit analysis allows him, the more appropriate costing method for CPUs should be job order costing.
Nevertheless, to me it appears that applying job order costing may require more inputs and efforts than the benefits of expected output.
I would say job order is more suitable but will also require more inputs which may not allow to follow it.
Regrads,
Kamran.