During Week Four, You Studied Process Costing And Saw How

During Week Four You Studied Process Costing And Saw How This Cost

During week four you studied process costing and saw how this cost accounting system varied from job order costing that you learned about in week three. For your week four discussion board post I would like you to identify a publicly traded manufacturing company. BY publicly traded it means they have stock traded on an exchange such as the New York Stock Exchange. I would then like you to research a product they manufacture. Based on what you have found would they use process costing or job order costing. Why did you select the method they did. Please be sure to integrate terms and concepts you learned about in week three and four as you describe the cost accounting system they might use. Submission Details: 2) Question is a worksheet of cost accounting with the attached pictures

Paper For Above instruction

In this paper, I will examine a publicly traded manufacturing company to determine whether it employs process costing or job order costing, based on its product manufacturing process and the nature of its operations. The selected company for this analysis is The Procter & Gamble Company (P&G), a globally recognized leader in consumer goods, publicly traded on the New York Stock Exchange under the ticker symbol PG. P&G manufactures a wide array of products, including personal care, cleaning, and health care items, which are produced at a large scale with high-volume manufacturing processes.

Overview of the Company and Its Products

Procter & Gamble's extensive product portfolio includes brands such as Tide, Gillette, Pampers, and Head & Shoulders. These products are manufactured on a large scale to meet global demand, often involving continuous production processes with standardized procedures. Given the diversity of products and the manufacturing environment, an analysis of whether process costing or job order costing is applicable becomes essential in understanding their cost accounting system.

Understanding Process Costing and Job Order Costing

Process costing and job order costing are two distinct methods used to allocate manufacturing costs to products. Process costing aggregates costs across continuous processes, making it suitable for industries where products are homogeneous and produced in mass quantities (Garrison, Noreen, & Brewer, 2020). Conversely, job order costing assigns costs to specific jobs or batches, common in industries producing customized or varied products (Horngren, Datar, & Rajan, 2015).

Application to P&G’s Manufacturing Processes

Given P&G’s production of standardized consumer goods such as laundry detergents, shampoos, and razors, which are mass-produced in the same manner, it is logical to infer that they primarily utilize process costing. The continuous and homogeneous nature of their production runs supports the use of a process costing system, where costs are accumulated by process or department over a period, rather than by individual product or batch.

Reasons for Using Process Costing

p&G’s use of process costing is justified by the repetitive, high-volume nature of their manufacturing. The costs associated with raw materials, direct labor, and manufacturing overhead are accumulated and averaged over all units produced during a period, which aligns with the characteristics of process costing (Garrison et al., 2020). The organization’s need to control costs across lengthy production processes, maintain consistency, and generate comparable unit costs further supports this approach. Additionally, the use of process costing allows P&G to prepare financial statements efficiently and accurately reflect the costs of large quantities of homogeneous products.

Integration of Week Three and Four Concepts

From week three, the understanding of cost allocation and the distinction between direct and indirect costs helps clarify why P&G's cost system is tailored toward process costing. The concepts of cost pools, cost drivers, and the averaging of costs across units are crucial components of a process costing system. In week four, the focus on manufacturing environments with continuous production reinforces the idea that process costing provides relevant information for cost control and decision-making in such settings.

Conclusion

In conclusion, The Procter & Gamble Company most likely employs a process costing system given the homogeneous nature of their mass-produced products and continuous manufacturing processes. The choice is driven by the need for efficient cost accumulation, production consistency, and simplified cost management. Understanding the distinctions between process and job order costing, along with the associated concepts, is vital in analyzing and interpreting the cost accounting systems of large manufacturing firms like P&G.

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2020). Managerial Accounting (16th ed.). McGraw-Hill Education.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis (15th ed.). Pearson Education.
• Drury, C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Managerial Accounting: Tools for Business Decision Making (8th ed.). Wiley.
• Hilton, R. W., & Platt, D. E. (2017). Managerial Accounting: Creating Value in a Dynamic Business Environment (11th ed.). McGraw-Hill Education.
• Blocher, E. J., Stout, D. E., & Cokins, G. (2019). Cost Management: A Strategic Emphasis (8th ed.). McGraw-Hill Education.
• Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting (3rd ed.). Pearson.
• Anthony, R. N., & Govindarajan, V. (2017). Management Control Systems (13th ed.). McGraw-Hill Education.
• Horngren, C. T., Harrison, W. T., & Oliver, M. S. (2014). Financial & Managerial Accounting. Pearson.
• Axley, S. R., & McMurray, R. (2020). Cost Accounting: Foundations and Evolutions. Routledge.