B.1. While many companies use a job order costing system or a process costing system, many complex companies use a combination process that combines parts of a process cost system and job order cost system.

(a) What is the hybrid costing system called that combines parts of a process cost and job order cost system?

(b) Provide one example of a likely business or that might use a hybrid costing system.

(c) For this business that uses a hybrid costing system, explain the portion of the companys process that would benefit by using a process costing system. What benefit would this company derive by using a process system for this process (i.e., lower cost, greater efficiency)? Additionally, explain the companys process that would benefit by using a job order costing system. What benefit would this company obtain by utilizing a job order costing system rather than a process costing system for this process (i.e., lower cost, greater efficiency)?

SOLUTION

B.1.a.

B.1.b.

B.1.c.