Question

Please post one comment about how you would apply job order cost to a service organization. Be very practical about this statement.

Answer 1

The job order cost can be utilized in service organization such as movie studios, repair shops, hospitals, law firms, and manufacturing companies. Service organizations applies job order cost cards for recording the costs of materials, supplies, labor, and overhead incurred in performing a specific job and to determine selling prices in cost-plus contracts.

In a movie studio, like Walt Disney utilize job costing. Each movie that they produce is a specific job; and they account costs based on the direct material (customs, film, props, etc.) and direct labour (directors, actors, and extras) which they spent while creating the movie. A share of overhead costs of the studio, such as equipment depreciation, utilities, wages of maintenance workers, and so forth, is also charged to each movie