BUS 121 - Managerial Accounting Chapter 3: System Design – Job Order Costing I. Unit Cost Data A. Used for a variety of purposes. 1. Costing of inventory and CGS on financial statements, and determination of GAAP generated net income. 2. Various management cost analyses for decision making: a. Pricing of products and services. b. Adding or dropping product lines. c. Make or buy decisions B. Full Costing , also called Absorption Costing is used for GAAP generated data on financial statements; caution must be exercised if same data is used for internal management reports. II. Costing Systems A. General Cost Accounting: Periodic Inventory costing system typically used in small manufacturing concerns where costing data is accumulated in month-end reporting. B. Job Order Costing: System used when there is one prototype job, or a number of distinct jobs, products, or batches of product. Most manufacturers use perpetual inventory systems. C.
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