Q. 17-23RQ

Question

Why would the manager of a service company need to use job order costing?

Step-by-Step Solution

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Answer

The job order costing system is used by the manager of the service company because it helps in ensuring that the customers are charged correctly, and allows the company to adjust the pricing on future similar job if required.

1Service companies

Service companies means the companies which are incorporated to provide services of any kind. Its income is generated by providing the services instead of selling the products.

2Job order costing

Job order costin system is a system that determines the price of each individual product and ensures that the cost is reasonable or not. In service sector companies, it is used to ensure whether the service fees charged by the companies are correct or not. And if the pricing is not correct then it helps the company in adjusting the price for future projects.

Q. 17-24RQ

Q. 17-22RQ

Other exercises in this chapter

Q17-6RQ

Question: A job was started on May 15, completed on June 27, and delivered to the customer on July 6. In which accounts would the costs be recorded on the finan

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Q. 17-24RQ

How is the predetermined overhead allocation rate used by service companies?

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Q. 17-22RQ

Explain the terms accumulate, assign, allocate, and adjust as they apply to job order costing.

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Q. 17-21RQ

Refer to the previous question. Give the journal entry to adjust the Manufacturing Overhead account for overallocated or underallocated overhead.

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