Managerial Accounting: Job vs Process Manufacturing, ABC, Overhead Rate Methods

Running Head: Managerial Accounting 0
Report on
Managerial Accounting
Table of Contents

Managerial Accounting 1
Introduction:..........................................................................................................................................1
Comparison between the job and process manufacturing:.....................................................................2
Which system to opt?............................................................................................................................2
Decision making information:...............................................................................................................3
Activity based costing:..........................................................................................................................3
Decision making using Activity Based Costing:....................................................................................4
Overhead rate methods and its usefulness:............................................................................................4
Plant wide method:............................................................................................................................4
Departmental Method:.......................................................................................................................5
Activity based costing plant method:.................................................................................................5
Conclusion:..........................................................................................................................................5
Bibliography:.......................................................................................................................................5

Managerial Accounting 2
Introduction:
The two major costing systems which are used in manufacturing are job order manufacturing
and process manufacturing. In this report there is a contrast of the above two mentioned
costing systems, how they are helpful in decision making and which firms opt for these kinds
of systems. Also further activity based costing is examined and its usefulness is analysed.
Comparison between the job and process manufacturing:
Job order manufacturing also known as job order production is a process of customizing the
products according to the customer’s needs. It accumulates the cost of production attributable
to ‘lot’ of units or specific ones. On the other hand in process manufacturing the goods are
produced by combining supplies, substances of raw nature and ingredients using a recipe or
formula. They cannot be disassembled. The output of one becomes input for other (Parker &
Fleischman, 2017).
Job order manufacturing is applicable in industries such as clothing, aircraft, food companies,
accounting firms, movie producers, and hospitals and more whereas some examples of
process costing industries are pharmaceuticals, plastics and chemicals, gasoline, canned or
soda bottles and more.
Under job costing the products are unique whereas the products are standardized in the latter
system. Also the former one requires a lot of bundle of books to keep up as records unlike in
process costing (Dale & Plunkett, 2017).
Which system to opt?
A service firm such as advertising agency which deals in planning and creating
advertisements shall opt for job order costing. This system will ease the ascertainment of
costs and helps in formulating laws and rules to control and regulate the job or unit that