Job order costing cannot be used for a service company.

Question

Quizplus · Accepted Answer

Job order costing can be used for a service company that provides customized or unique services to each customer, such as a law firm or consulting company. The costs of providing these services can be traced to specific jobs or clients and allocated accordingly. However, it may not be suitable for service companies that offer standardized services or have high volume production, such as a restaurant or retail store. In such cases, process costing or activity-based costing may be more appropriate.

Job Order Costing Cannot Be Used for a Service Company