In this paper, please discuss the three costing methods of job order costing, process costing, and activity-based costing.
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Define each method and explain when it is best suited to be used.
Compare and contrast the methods and consider their benefits and shortfalls.
Use the information provided to propose which cost method should be used to allocate costs.
Wet Suit World is a company that manufactures wet suits for use with water sports such as snorkeling and scuba diving. The suits are made in sizes small through 3x extra large with levels of insulation layers of 2 millimeters, 5 millimeters, and 7 millimeters. They come in black with the Wet Suit World logo imprinted across the chest. The materials are the same for all of the suits, though they vary in thickness. All suits undergo the same production and quality inspection processes.
There is no one “correct” answer to the proposed cost allocation method as long as the answer is well-supported based on the week’s learning.
Superior papers will include the following when responding to the assignment question:
Define the three costing methods.
Explain when each is most appropriately used.
Compare and contrast the methods, considering both benefits and shortfalls.
Provide a well-supported proposal for the cost method Wet Suit World should use.