09 Jun cQuestion Reply to response in 175 word
cQuestion
Reply to response in 175 words
I agree with the new controller. Job costing system is better to use for custom homes because it would allow them to allocate costs to that particular job. Since custom homes are unique, it will require its own accounting because the expenses for labor, materials, etc. are unique to that individual home.
However, if KB Homes use a process costing system like the controller suggested, they will have an easier time accounting for expenses within each phase of construction. Due to the houses only having 3 or 4 different floor plans, they can isolate the costs of each floor plan (if including different materials from the other models) as well as by each step in the process; hence the name: a process costing system. Houses that are homogeneous will have the same expenses that can be broken down based on the stage of the project you are in
I agree with the new controller. Job costing system is better to use for custom homes because it would allow them to allocate costs to that particular job. Since custom homes are unique, it will require its own accounting because the expenses for labor, materials, etc. are unique to that individual home.
However, if KB Homes use a process costing system like the controller suggested, they will have an easier time accounting for expenses within each phase of construction. Due to the houses only having 3 or 4 different floor plans, they can isolate the costs of each floor plan (if including different materials from the other models) as well as by each step in the process; hence the name: a process costing system. Houses that are homogeneous will have the same expenses that can be broken down based on the stage of the project you are in
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