Specific-order Costing

Abstract

You may remember from Chapter 1 that the different costing methods used for establishing actual costs can be divided in to two main groups according to the nature of production. Some businesses make products or provide services as continuous operations — such as a brewery producing cans of beer or a utility company providing electricity, gas or water — and we shall be looking at the costing methods used in these types of businesses in Chapter 17. Other businesses carry out their activities at the specific order of clients — such as a building firm that builds a house to meet the specific requirements of a client or an electrician who repairs a washing machine. In this chapter we shall be looking at the main specific-order costing methods used by these types of businesses.