A job order costing system would best fit the needs of a company that makes:

A job order costing system would best fit the needs of a company that makes:

a. Shoes and apparel.

b. Paint.

c. Cement.

d. Custom machinery.

e. Pencils and erasers.

Answer: d. Custom machinery.

A job order costing system is most appropriate in situations where a company is producing and selling customized products or services in response to individual customer’s orders or contracts. It provides accrual for costs of individual jobs or contracts for material, labour and other overhead for the work in progress. Purchasers of custom-built machines are built to the client’s order and as such the use of a job order costing system is recommended. This system helps them establish precise costs of the special machines for each job and precise pricing and profitability of the specific job done.