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MGT402 Questions Answers - Why do some companies need a cost accounting system while others do not?

MGT402 Questions Answers - Why do some companies need a cost accounting system while others do not?

Why do some companies need a cost accounting system while others do not? What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company?


Answer:

Companies need a cost accounting system only if they need to measure, record, and report the costs of manufacturing products. The two basic types of cost accounting systems are job order
costing and process costing.

A job order cost system is appropriate when production consists of batches of unique products (jobs).


A process cost system is used to apply costs to similar products that are mass-produced in a continuous fashion.

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