Question

In a ________ the cost object is a unit or multiple of units of a distinct product or service which we call a job. Each job generally uses different amounts of resources.

Answer 1

In job costing, costs are assigned to each job, which varies in resource usage, aiding in pricing strategy and profitability.

Step-by-step explanation:

In a job costing system, the cost object is a unit or multiple units of a distinct product or service which is referred to as a job. Unlike in processes that produce goods in a continuous stream, where costs are averaged over all units, job costing assigns costs to each specific job, which are usually different due to the unique characteristics of each job.

Costs in a job costing system vary since each job can consume different amounts of resources like labor, materials, and overhead. Businesses, particularly those offering customized products, rely on job costing to calculate the cost of each job accurately, ensuring effective pricing strategies and profitability analysis. It involves tracking various costs such as explicit costs like materials and wages, and implicit costs, which include the opportunity costs of using owned resources.