Question

Which of the following is TRUE of job order cost systems?
A. Examples of companies that use job order cost systems would be oil refineries, paper producers, chemical processors, and food processors.
B. Job order cost systems are not widely used.
C. Job order cost systems are often used by companies that manufacture custom products for customers or batches of similar products.
D. Job order cost systems provide product costs for each manufacturing department or process.

Answer 1

Answer:

C

Explanation:

In a job order cost system, costs are assigned to each job or batch.

A job may be for a specific order or inventory.

Product cost are traced to individual inventory items and manufactured to order. Cost records must be maintained for each distinct product job.

A key feature to identify it is that each job or batch has its own distinguishing characteristics.

The objective of the system is to compute the cost per job.

Measures costs for each job completed, not for set time periods.

Typically used by companies that make unique or special order products, such as customized publications, built in cabinets, or made to order draperies.