Alternative Costing Methods

The text presents job and processing costing systems as virtual “polar extremes,” there are many situations where it may be best for a company to use a hybrid system that combines attributes of both systems.  Describe such a situation and discuss how the hybrid system may be better than either pure job or pure process systems.

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Think Twice

Assume you own a business that makes two complementary products for which you allocated manufacturing overhead proportionally.  A competitor is trying to undercut your price for one of the products.  How might ABC costing help you better compete with this pending threat?

 

Activity Base Costing-

How do managers cost products or services using ABC systems?

When should managers consider using an ABC costing system? How should they decide to adopt this method?

Alternative Costing Methods

I would like you all to select a costing method: process, job, or activity based.
Describe the nature of your chosen method. What types of organizations should choose that method? How is this method different from the costing methods you did not choose?

I have implemented a job costing system in my company.  If you were my corporate controller, how would you implement a job-costing system?

Why is process costing a better costing method for certain industries? What would happen if they used a job costing system?

Can we explain three major source documents and how they are used in job costing systems? Why are these source documents needed?

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