Question

Match each costing system characteristic to job order costing, process costing, or both.

1. Used by companies that manufacture identical items through a series of uniform production steps or processes

2. Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold

3. Used by companies that manufacture unique products or provide specialized services

4. Has multiple Work-in-Process Inventory accounts

5. Tracks direct materials, direct labor, and manufacturing overhead costs

Short answer

S.No.	Particulars	Classification
1.	Used by companies that manufacture identical items through a series of uniform production steps or processes	Process costing
2.	Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold.	Both
3.	Used by companies that manufacture unique products or provide specialized services	Job order costing
4	Has multiple Work-in-Process Inventory accounts	Process costing
5	Tracks direct materials, direct labor, and manufacturing overhead costs	Both

Step-by-step solution

Costing system

The costing system explains the method to calculate the cost of manufacturing the products. The system provides two different methods to calculate the costing, i.e., the job order costing system and the process costing system.

Classification of costing system when the company manufactures identical items through a series of uniform production steps

Process costing system is used by the companies that manufacture similar products in large quantities by following a series of uniform manufacturing procedures. Hence, it is classified as the process costing system.

Classification of costing system when company transfers cost from work in process to finished goods inventory to cost of goods sold

In both costing systems, the company transfers the cost from the work in process account to the finished goods account and from the finished goods account to the cost of goods sold account. It is the normal flow of cost of manufacturing from one account to another.

Classification of costing system when the company manufactures unique products or provides specialized services

The job order costing system is used by companies engaged in manufacturing the specialized product in small quantities on the order of the client or as per the specification of the customers. Hence, the company manufacturesunique productsthat provide specialized services using the job order costing system.

Classification of costing system when a company has multiple works in process accounts

In process costing only, the product is manufactured by passing through multiple numbers of processes. Hence, the company hasmultiple work-in-process accountsthat use a process costing system.

Classification of costing system when company manufacture track direct material, direct labor, and manufacturing overhead cost.

The company tracks the direct material cost, direct labor cost, and manufacturing overhead under both systems. It is so because both systemsare used to calculate the total cost of manufacturing the products. Hence, it is classified in both (process costing and the job order costing system),