Job order costing system is best used when a business considers each customer order a separate job. Management uses the information as a way to control usage of raw materials, production equipment and labor hours.
Bounty Bike Company is a family-owned bicycle manufacturing company that put together bicycles that are completely customized for each customer according to provided specifications. The customer’s vary from wanting racing bikes, sturdy off road bikes, custom sizing and personalized paint schemes. A job order cost system will provide reports with the company’s cost for each bike they build that meet their customer requests.
Include two or more of the following in your discussion posting:
- What goals does Bounty Bike Company have that are supported by the job order costing system.
- What are the pros and cons of a job order costing system for Bounty Bike Company?
- How might Bounty Bike Company use the data from the job order costing system to improve their financial results?
- What business decisions are impacted by information acquired from the job order costing system?
- Describe manufacturing costs Bounty Bike Company is likely to incur to build personalized bikes.