Why might an advertising agency use job costing for an advertising campaign by P
ID: 394558 • Letter: W
Question
Why might an advertising agency use job costing for an advertising campaign by Pepsi, whereas a bank might use process costing to determine the cost of checking account deposits? How are these approaches similar? What importance to these results make to managers? Why might an advertising agency use job costing for an advertising campaign by Pepsi, whereas a bank might use process costing to determine the cost of checking account deposits? How are these approaches similar? What importance to these results make to managers?Explanation / Answer
Answer:
In advertising agency the Job costing enables all the specific aspects of each job to be identified, whereas in a bank a process costing can be used to compute the cost of numerous identical or similar services.(checking accounts and deposits).
Both of these costings have the same basic purpose i,e: to assign material, labour, and overhead costs to the products and facilitate computation of cost of each product unit. These results helps the managers to understand the Costs associated with each product, and to differentiate them based on the identical mass production or services, and based on specificity of the products aspects. Therefore, in advertising agencies managers will use job costing to allocate the costs depending upon the specific need and aspects, whereas in the bank Managers will use process costing to compute the similar and mass products I,e: their accounts and deposits, using same methodology.
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