Business Finance Homework Help

I’m working on a Business question and need guidance to help me study.

Respond to both peers

Response 1:

When looking at the difference in job costs it depends on how high level the process is. For example, job-order costs would be considered the lower level of costing, costing solely on end goods or services. Process costing would be longer term costing with more complexity. Process costing would include not only the costs associated with producing the goods referred to in job-costing, but also assemble line and other factors that need to be in place to produce product.

Job-order costing can significantly affect financial statements especially in retail industries where my background is based in. Depending on job order costing financials can be inflated or deflated at any time given variable conditions. For instance if there is a big cost savings on oil that impacts plastics, we may be given a cost saving on plastics and show increased profit margins. On the flip side of that we can have impacts like the tariffs that impact costing and reduce profit margin. This can cause changes daily in a companies financials as big costs swings occur. The way we would typically respond is to focus more on profit dollars instead of margin and sell more of higher profit items and buy less of constrained profit items.

Process costing systems occur at a much higher level. In terms of retail this would be considered the factory owners costing. They are responsible for organizing production timing, labor, transportation and logistics, warehousing and raw materials. This is a very complex process to cost out their bottom line. One of the biggest challenges factory owners see is the difference between production volume. The more volume the lower the cost is for the entire process. The smaller the volume the more expensive it is to produce. They have to balance their production to off set the costing to retain a profit and keep positive customer relationships.

Response 2:

When determining product costs many factors tend to play a part but the product the company sells is most beneficial to the type of accounting system the organization uses. Costing systems like job-order costing and process costing are the most common. With each system comes some differences and comparisons.

Job-order costing systems are more towards individual products such as Disney movies. Process costing spreads the cost more evenly over homogenous products such as cereals like General Mills. Process costing systems provide averages of their product costs where Job-order costing systems are more specific.

Events in a job-order costing system affect financial statements like the pattern of the physical flow of materials. An example would be like boats of Benchmore as physical parts get ordered through their identification number specific to the job detail of the boat is as the cost accumulate and will break down like the construction of the boat.

Events in a process costing system affect financial statements like job-order costing systems by flowing like the physical aspects during creation. Products costs flow from raw materials to work in process, then to finished goods, and finally cost of costs sold, but the main difference in their accounting is in the work in process inventory. The main difference is that process costing adds up by department.

Class, how would you go about distinguishing their differences and similarities to explain to someone with no common knowledge? Do you find this difficult or relatively easy? Thank you and have a great day.

Edmonds, T., Edmonds, C., Edmonds, M., Olds, P. (2020). Managerial Accounting Concepts (9th ed). New York, NY: McGraw-Hill Education.