Question

For each of the following products and services, indicate whether it is more likely produced in a process operation (P) or in a job order operation (J).

1. Tennis courts

2. Organic juice

3. Audit of financial statements

4. Luxury yachts

5. Vanilla ice cream

6. Tennis balls

Short answer

1. J
2. P
3. J
4. J
5. P
6. P

Step-by-step solution

Explanation on Tennis Courts

Under job costing, the cost of a special contract or customized product is estimated.Preparing the tennis courts is part of job order operation since it varies with the requirements of the customer, and the basis on that cost fluctuates.

Explanation on Orange juice

Process costing is used for products which require multiple activities or processes. Preparing orange juice is part of the process operation since it requires multiple steps or activities to finally process the orange juice. Starting from procurement, sorting, peeling, juicing, filtrations, etc are some of the steps.

Explanation on audit of financial statements

An audit of financial statements is an accounting process in which auditors give their opinion on the financial statement. It varies with the requirements of the client and the size of the company in terms of revenues, profits and so on. Hence, job order operation will be used.

Explanation on Luxury Yachts

Manufacturing luxury yachts is part of the job process since the total cost to be charged from the customer is based on the requirements and customization.

Explanation on Vanilla Icecream

Making vanilla ice cream is a part of the process operation since it involves multiple activities, and every activity adds value to the product.

Explanation on tennis balls

Manufacturing of tennis balls is part of the process operation, as it also has multiple activities or steps to be performed for finally producing the tennis balls.