Question

Name a company that is more likely to use process rather than a job order costing system and why? (2 sentences)

What is the purpose of a production report in cost accounting ? (1 sentence maximum.)

Answer 1

Process costing is used when a large number of homogeneous products are to be produced in a series of manufacturing processes. Job order costing is used when each output to be produced is unique i.e each unit is different from other. Companies that are more likely use process costing are Bradford soap works Inc (Soap making), Aramco (Oil company). These companies use process costing because they produce similar output units rather than custom products and production takes place through multiple processes.

Production report is a management document which reports the flow and cost of units transferred through work in process of a department.