17-1SE-g - Horngren'S Financial And Managerial Accounting

Question

Distinguishing between job order costing and process costing

Would the following companies most likely use job order costing or process costing?

g. A cell phone manufacturer      

Step-by-Step Solution

Answer

A cell phone manufacturer is most likely to use process costing system.

Manufacturing companies

A manufacturing company means the companies incorporated to manufacture the product in large quantities to sell in the market.

A cell phone manufacturer

A cell phone manufacturer is engaged in manufacturing the cell phones in large quantities. The manufacturing of cell phones is passed through various processes like making of the cell phone body, installation of software, testing phase, etc. Hence, the cell phone manufacturer is most likely to use a process costing system.