EEC has introduced a new 1.5GB computer memory chip.
Should EEC use a job order costing system or a process costing system to report the costs of this new product? How are the two systems different? Describe how the selected system would work to track the costs of the product. Identify the cost driver and explain the process of tracking the costs. Provide examples of products that EEC might offer for which a job order costing system would be appropriate. Also, provide examples of products that EEC might offer for which a process costing system would be appropriate.
Objective: Contrast job order and process costing and explain business situations in which each would be used.
Questions 2 and 3
I need help with answering the following cost accounting questions. Could you please provide a words count of 200 for each questions.
2. Contrast the primary focus of job order cost accounting and of process cost accounting.
3. What are the similarities between a job order and a process cost system?
Call me manufactures telephones. In 2004, Call me introduced a stylish telephone with a clear plastic casing, allowing you to see the parts of the phone. The two products are manufactured in separate batches. Overhead is allocated on the basis of machine hours. The information from 2004 is as follows:
Total Easy Touch Clear Phone
Units produced 110,000 80,000 30,000
Materials cost $640,000 $400,000 $240,000
Direct labor cost $110,000 $80,000 $30,000
Machine hours 140,000 80,000 60,000
a. For each product, what is the cost per unit using process costing?
b. For each product, what is the cost per unit using job-order costing?
c. Which costing method is more accurate for this example? Explain
d. Assume Call Me decides to use process costing to calculate unit cost. If Call Me prices its phones at a 30% markup on cost, what would be the unit price for the phones? Is this a good pricing strategy or is one product being overcharged and the other being undercharged?
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