Which costing system is used when the work done consists of identifiable jobs or batches?

Which costing system is used when the work done consists of identifiable jobs or batches?

• A. Specific order costing
• B. Batch costing
• C. Continuous Operation Costing
• D. Service costing

Answer: (A)

This question tests understanding of costing by the unit of cost accumulation. When the work consists of identifiable jobs or customer orders, costs are collected for each individual job. This lets you determine the exact cost of a particular job, set prices, and assess profitability on a per-job basis. That approach is known as specific order costing, or job costing, because the costing tracks costs for each distinct job or order. Batch costing would be used when the cost unit is a batch rather than a single job, and costs are assigned to each batch. Process costing is for continuous, homogeneous production, and service costing is for services. So for work that can be identified as separate jobs or orders, tracking costs per job (specific order costing) best fits the scenario.

This question tests understanding of costing by the unit of cost accumulation. When the work consists of identifiable jobs or customer orders, costs are collected for each individual job. This lets you determine the exact cost of a particular job, set prices, and assess profitability on a per-job basis. That approach is known as specific order costing, or job costing, because the costing tracks costs for each distinct job or order.

Batch costing would be used when the cost unit is a batch rather than a single job, and costs are assigned to each batch. Process costing is for continuous, homogeneous production, and service costing is for services. So for work that can be identified as separate jobs or orders, tracking costs per job (specific order costing) best fits the scenario.