Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 42 views

    Costing Systems and Practical Applications Name Institutional Affiliation

    Uploaded by

    Eli Koech
    This document discusses different costing systems and provides examples of companies that use each system. Job costing is best for companies that do custom work for individual customers, like Deloitte which uses it for client-specific consulting services. Process costing works well for manufacturers of identical units, like Pepsi which uses it for standardized drink production. Activity-based costing assigns costs based on different activities and the resources they require, making it suitable for companies like UPS where delivery activities have varying costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Costing Systems and Practical Applications Name Institutional Affiliation

    Uploaded by

    Eli Koech
    42 views4 pages
    This document discusses different costing systems and provides examples of companies that use each system. Job costing is best for companies that do custom work for individual customers, like Deloitte which uses it for client-specific consulting services. Process costing works well for manufacturers of identical units, like Pepsi which uses it for standardized drink production. Activity-based costing assigns costs based on different activities and the resources they require, making it suitable for companies like UPS where delivery activities have varying costs.

    Original Title

    Cost Systems

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses different costing systems and provides examples of companies that use each system. Job costing is best for companies that do custom work for individual customers, like Deloitte which uses it for client-specific consulting services. Process costing works well for manufacturers of identical units, like Pepsi which uses it for standardized drink production. Activity-based costing assigns costs based on different activities and the resources they require, making it suitable for companies like UPS where delivery activities have varying costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    42 views4 pages

    Costing Systems and Practical Applications Name Institutional Affiliation

    Uploaded by

    Eli Koech
    This document discusses different costing systems and provides examples of companies that use each system. Job costing is best for companies that do custom work for individual customers, like Deloitte which uses it for client-specific consulting services. Process costing works well for manufacturers of identical units, like Pepsi which uses it for standardized drink production. Activity-based costing assigns costs based on different activities and the resources they require, making it suitable for companies like UPS where delivery activities have varying costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Running head: COSTING SYSTEMS

    Costing Systems and practical applications


    Name
    Institutional Affiliation

    COSTING SYSTEMS
    2

    Costing Systems and real life applications


    Job costing method should particularly be applied when a job is undertaken to fit the
    customers specifications and usually used by business which receives order for work peculiar
    to needs of individual customers. Its usually applied in repair industries, automobiles,
    consultancy firms, accounting firms and printing press. A good example of a company that uses
    this method is Delloitte. The company utilizes this system because its clientele requires different
    and specific services hence cost must be based on the specifications. For instance the cost of a
    consultant requiring services in audit cannot be the same requiring advice in financial risk hence
    cost is distributed accordingly. In addition, the organization is able to measure the profitability
    of each service offered individually as well as determine the performance of each service
    provider.
    Process costing should be applied in businesses where there are standard operations with
    production of homogenous and identical units. Products are produced in same manner and the
    output is the final product of a series of operations. This system bests suits manufacturing and
    processing industries. A good example of a company using this system is Pepsi. It uses the
    system since its best suited to the processing of the carbonated drinks as well enable easy
    facilitation of inventory. The company can also exercise efficient control over the production
    process.
    Activity based costing assigns cost based on the activities required to deliver a service
    and the resources these activities absorb. This system should be applied to business that produce
    products or service whereby each activity has a different cost to the other. Companies using this

    COSTING SYSTEMS
    2

    method include construction and healthcare providers. A good example is the united parcel
    service (UPS) The UPS uses ABC to monitor financial performance at all levels and reduce cost.
    Since it deals with shipping and delivery of different parcels, each activity has a cost associated
    to it different from others. The company applies this cost system since it brings more
    transparency in calculation of cost and hides potential inefficiencies of the service provider.

    COSTING SYSTEMS
    2

    References
    Dale, B. G &Wan, G.M. (2002) .Setting up a Quality Costing System: An evaluation of the key
    Issues. Business Process Management Journal, 8(2), 104 116.
    http://dx.doi.org/10.1108/14637150210425081
    Gunasekaran, A. Williams, H.J & McGaughey, R.E. (2005). Performance Measurements and
    Costing System in New Enterprise. Technovation , 25(5), 523-533 .
    http://dx.doi.org/10.1016/j.technovation.2003.09.010
    Dan,S.(1995) The Benefits of Activity-based Cost Management to the Manufacturing
    Industrry, Journal of Management Accounting Research , 7 , 167
    http://search.proquest.com/openview/db2ab97314018afefbefb0a5fe3dbaef/1?
    origsite=gscholar&cbl=31820

    pq-

    You might also like