Founded in 1970, Parlex Corporation is a world leader in the design and manufacture of flexible interconnect
Question:
The following information was provided in the company’s annual report.
PARLEX COMPANY
Notes to the Financial Statements
The Company’s products are manufactured on a job order basis to customers’ specifications. Customers submit requests for quotations on each job, and the Company prepares bids based on its own cost estimates. The Company attempts to reflect the impact of changing costs when establishing prices. However, during the past several years, the market conditions for flexible circuits and the resulting price sensitivity haven’t always allowed this to transpire. Although still not satisfactory, the Company was able to reduce the cost of products sold as a percentage of sales to 85% this year versus 87% that was experienced in the two immediately preceding years. Management continues to focus on improving operational efficiency and further reducing costs.
Instructions
(a) Parlex management discusses the job order cost system employed by their company. What are several advantages of using the job order approach to costing?
(b) Contrast the products produced in a job order environment, like Parlex, to those produced when process cost systems are used.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Accounting Principles
ISBN: 9781118566671
11th Edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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