Managerial Accounting
Managerial Accounting
14th Edition
ISBN: 9781337270595
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
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Chapter 3, Problem 1DQ

Which type of cost system, process or job order, would be best suited for each of the following: (A) TV assembler, (B) building contractor, (C) automobile repair shop, (D) paper manufacturer, (E) custom jewelry manufacturer? Give reasons for your answers.

Expert Solution & Answer
Check Mark
To determine

Identify the following:

  1. a) The TV assembler is a type of Job order costs or Process costs.
  2. b) The building contractor is a type of Job order costs or Process Costs.
  3. c) The automobile repair shop is a type of Job order costs or Process Costs.
  4. d) The paper manufacturer is a type of Job order costs or Process Costs.
  5. e) The custom jewelry manufacturer is a type of Job order costs or Process Costs.

Explanation of Solution

Cost Accounting Systems

Cost accounting systems are used to measure, record, and report product costs. Managers use products costs for setting product costs, controlling setups, and developing financial statements. They are two types of Cost accounting systems they are:

  • • Job order costs, and
  • • Process costs
  1. a) Process costs systems suitable for TV assembler.
  2. b) Job order costs suitable for Building Contractor.
  3. c) Job order costs suitable for automobile repair shop.
  4. d) Process costs suitable for paper manufacturer.
  5. e) Process costs suitable for custom jewelry.
  6. a) TV assembler is suitable for the process cost system because, the products are slightly standard and lose their identities as individual items.
  7. b) Building contractor is suitable for Job order cost system because; the building cost can be identified with each job without great difficulty.
  8. c) Automobile repair shop is suitable for Job order cost system because; the cost can be equitably recognized with each job.
  9. d) Paper manufacturer is suitable for Process cost system because, manufacturing paper process endless and the products are homogeneous.
  10. e) Custom jewelry manufacturer is suitable for job order cost system because, most of the jewelry production consists of job orders only, and the costs can be rationally recognized with each job.

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Chapter 3 Solutions

Managerial Accounting

Ch. 3 - Prob. 2BECh. 3 - Prob. 3BECh. 3 - Equivalent units of conversion costs The Rolling...Ch. 3 - Prob. 5BECh. 3 - Prob. 6BECh. 3 - Prob. 7BECh. 3 - Prob. 8BECh. 3 - Entries for materials cost flows in a process cost...Ch. 3 - Flowchart of accounts related to service and...Ch. 3 - Entries for flow of factory costs for process cost...Ch. 3 - Prob. 4ECh. 3 - Equivalent units of production The Converting...Ch. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Costs per equivalent unit Georgia Products Inc....Ch. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Errors in equivalent unit computation Napco...Ch. 3 - Cost per equivalent unit The following information...Ch. 3 - Costs per equivalent unit and production costs...Ch. 3 - Cost of production report The debits to Work in...Ch. 3 - Cost of Production report The Cutting Department...Ch. 3 - Prob. 18ECh. 3 - Prob. 19ECh. 3 - Prob. 20ECh. 3 - Lean manufacturing The following are some quotes...Ch. 3 - The Converting Department of Tender Soft Tissue...Ch. 3 - Prob. 23ECh. 3 - Prob. 24ECh. 3 - Prob. 25ECh. 3 - Prob. 26ECh. 3 - Prob. 27ECh. 3 - Prob. 28ECh. 3 - Entries for process cost system Port Ormond Carpet...Ch. 3 - Cost of production report Hana Coffee Company...Ch. 3 - Equivalent units and related costs; cost of...Ch. 3 - Work in process account data for two months; cost...Ch. 3 - Sunrise Coffee Company roasts and packs coffee...Ch. 3 - Entries for process cost system Preston Grover...Ch. 3 - Cost of production report Bavarian Chocolate...Ch. 3 - Equivalent units and related costs; cost of...Ch. 3 - Work in process account data for two months; cost...Ch. 3 - Prob. 5PBCh. 3 - Analyzing process cost elements across product...Ch. 3 - Analyzing process cost elements over time Pix...Ch. 3 - Determining cost relationships Midst ate...Ch. 3 - Ethics in Action You are the Cookie division...Ch. 3 - Communications Jamarcus Bradshaw, plant manager of...
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