Companies use different costing systems in determining cost of its products.
Discuss the conditions under which process costing might be ideal. Provide specific examples of companies that may use process costing and discuss why.
Dell’s manufacturing process at its Austin, Taxes facility consists of assembly, functional testing, and quality control of the company’s computer systems. The company’s build-to-order manufacturing process is designed to allow the company to quickly produce customized computer systems. For example, the company contracts with various suppliers to manufacture and configure base Latitude notebook computers and then Dell customizes these systems for shipment to customers. Quality control is maintained through the testing of components, parts, and subassemblies at varying stages in the manufacturing process.\
Describe how Dell might set a job-order costing system to determine the costs of its computers. What is a “job” to Dell? How might the costs of components, assembly, testing, and quality control be allocated to each job?
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