ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Which of the following businesses is most likely to use job costing as its main cost accounting method?
A bespoke furniture maker is most likely to use job costing, because each piece is made to a customer's order and its costs are collected separately. Continuous, identical-output operations such as bottling, power generation or cement making normally use process costing instead.
- AA bespoke furniture maker producing one-off pieces to customer ordersCorrect
- BA bottling plant producing identical drinks in continuous runs
- CA power station generating electricity continuously
- DA cement manufacturer operating a continuous process
Explanation
Job costing suits work done to individual customer specifications where each job is distinct and costs are collected per job. The other options involve continuous or homogeneous output, which suit process costing.
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