During Week Four, You Studied Process Costing And See How Th

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

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. I would like you to do 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. APA format is mandatory with intext citations.

Paper For Above instruction

Introduction

The distinction between process costing and job order costing is fundamental in manufacturing cost accounting, as it determines how costs are accumulated and assigned to products. A careful selection of the appropriate costing system hinges on the nature of the production process and the specific characteristics of the product being manufactured. This paper examines a publicly traded manufacturing company—The Boeing Company—and analyzes its production methods in relation to the concepts of process costing and job order costing. By understanding Boeing's manufacturing processes, we can determine which costing system it employs and why this method is most suitable.

Company and Product Overview

Boeing, a leading aerospace manufacturer listed on the New York Stock Exchange (NYSE), produces a variety of commercial airplanes, military aircraft, satellites, and defense systems. For this analysis, focus is placed on Boeing’s commercial airplane manufacturing, specifically its flagship models such as the Boeing 737, 747, 767, 777, and 787. The production of commercial airplanes involves highly intricate, large-scale processes that include substantial standardized procedures as well as customizations based on customer specifications.

Analysis of Production Process and Costing System

The manufacturing of commercial aircraft by Boeing involves continuous, mass production processes characteristic of process costing. The process encompasses multiple stages—engineering, forging, assembly, painting, and quality inspection—each involving substantial, homogeneous units that undergo similar processes. Because the production involves continuous flows of large quantities of similar units, Boeing's cost accumulation aligns with the methods associated with process costing, where costs are allocated to each department or process over a period (Drury, 2018).

In process costing, costs are accumulated by department or process, and then averaged over all units produced during the period, making it suitable for high-volume, homogeneous product output (Carter & Usry, 2012). Boeing’s use of standardized processes across its production lines allows for the aggregation of costs—such as raw materials, labor, and manufacturing overhead—across departments and time frames, aligning with the core principles of process costing.

On the other hand, if Boeing were producing customized aircraft tailored to specific customer requirements—such as one-of-a-kind military aircraft or specialized satellite systems—a job order costing system might be employed because each unit would have unique costs associated with its production. However, the primary production of commercial aircraft relies on repetitive, homogeneous processes suitable for process costing (Blocher et al., 2019).

Reasoning for Method Selection

The decision by Boeing to utilize process costing for its commercial aircraft aligns with key terms and concepts learned in weeks three and four, such as homogeneous product units, continuous processes, and departmental cost accumulation (Horngren et al., 2018). The repetitive nature of aircraft assembly lines, where each unit passes through similar stages, makes process costing the most efficient and accurate method.

Moreover, the large scale and volume of Boeing's production processes mean that assigning costs to individual units would be impractical and overly complex if using job order costing. Process costing simplifies costing procedures by averaging costs across all units, thus providing useful insights for management regarding production efficiency and cost control (Carter & Usry, 2012).

Furthermore, Toyota's production system emphasizes standardization and continuous flow, similar to Boeing’s manufacturing approach, reinforcing their reliance on process costing principles to improve cost management and operational efficiency (Shingo, 1989). Employing process costing allows Boeing to allocate overhead costs systematically and calculate unit costs reliably, which is essential for pricing, profitability analysis, and financial reporting.

Conclusion

In conclusion, Boeing’s manufacturing of commercial aircraft is best aligned with a process costing system. The standardized, continuous production process involving large quantities of similar units supports the use of process costing to accumulate and allocate costs efficiently and accurately. The choice of this costing method enables Boeing to effectively track costs, manage production budgets, and provide financial transparency to stakeholders. Understanding the operations and production nature of Boeing underscores the importance of selecting an appropriate cost accounting system tailored to the specifics of the manufacturing process.

References

• Blocher, E., Stout, D., Juras, P., & Cokins, G. (2019). Cost Management: A Strategic Emphasis (8th ed.). McGraw-Hill Education.
• Carter, D., & Usry, M. (2012). Cost Accounting: A Managerial Emphasis. South-Western College Pub.
• Drury, C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2018). Cost Accounting: A Managerial Emphasis. Pearson.
• Shingo, S. (1989). A Study of the Toyota Production System: From an Industrial Engineering Viewpoint. Toyota Central Research & Development Labs.
• Hilton, R. W., & Platt, D. E. (2013). Managerial Accounting: Creating Value in a Dynamic Business Environment (10th ed.). McGraw-Hill Education.
• Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.
• Needleman, B. (2020). Manufacturing Accounting and Control. Routledge.
• Williams, J., & McClure, M. (2016). The Standard Costing and Variance Analysis System. Accounting Education.
• Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2014). Introduction to Management Accounting. Pearson.