Chapter 2
Systems Design:
Job-Order Costing
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Learning Objective
LO1
To distinguish between
process costing and
job-order costing and
identify companies that
would use each costing
method
2-2
, Types of Product Costing Systems
Process Job-order
Costing Costing
A company produces many units of a single
product.
One unit of product is indistinguishable from
other units of product.
The identical nature of each unit of product enables
assigning the same average cost per unit.
2-3
, Types of Product Costing Systems
Process Job-order
Costing Costing
Example companies:
1. Weyerhaeuser (paper manufacturing)
2. Reynolds Aluminum (refining aluminum ingots)
3. Coca-Cola (mixing and bottling beverages)
2-4
Systems Design:
Job-Order Costing
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Learning Objective
LO1
To distinguish between
process costing and
job-order costing and
identify companies that
would use each costing
method
2-2
, Types of Product Costing Systems
Process Job-order
Costing Costing
A company produces many units of a single
product.
One unit of product is indistinguishable from
other units of product.
The identical nature of each unit of product enables
assigning the same average cost per unit.
2-3
, Types of Product Costing Systems
Process Job-order
Costing Costing
Example companies:
1. Weyerhaeuser (paper manufacturing)
2. Reynolds Aluminum (refining aluminum ingots)
3. Coca-Cola (mixing and bottling beverages)
2-4
