Question

Create a company that would use job order costing to track its product costs. . . include the business name, business type (service, merchandiser, manufacturer), brief description of operations, and why job costing is the appropriate choice.

Answer 1

Business name: ABC Consulting

Business type: Service firm

Brief description of operations:

· Handling of documents registration

· Advising clients on application of various laws and cases

· Handling cases of clients in court of law

Job costing is appropriate due to the following reasons:

· Each job is customer (client) order oriented and specific to each customer

· Each job order has a separate identity from one another

· Cost is accumulated for each job level for cost incurred- Material, labor and overheads applied

· Separate cost record is maintained for each job

· Profit can be ascertained at each job order level