Job Costing and Process Costing are some of the commonly used costing systems by companies. Companies that use job costing accounting systems accumulate the costs incurred in producing a given unit. This costing system is employed primarily by companies that specialize in producing customized or unique items such as the construction of a house ( Mulvenna, (n.d.) . On the other hand, companies that use a process costing system of accounting usually accumulate every cost incurred while producing finished goods. Companies that produce similar items can use this costing system ( Mulvenna, (n.d.) . Some companies, however, make use of a hybrid system that combines both job costing and process costing systems. One such company is Harley-Davidson Motorcycles.
Harley-Davidson produces complete motorcycles as well as their spare parts. A given model of a motorcycle is produced in batches of thousands. Also, the motorcycle parts are produced in large numbers ( Mulvenna, (n.d.) . This characteristic production technique qualifies Harley-Davidson to employ process costing in its pricing as this system of costing is appropriate for the company’s mass production technique. It is worth noting that the process involved in producing a single unit of motorbike involves a combination of thousands of parts. These parts are manufactured separately before assembling into a complete bike ( Mulvenna, (n.d.) . Thus, the production of each bike follows a customized order that qualifies the company to use job costing in its pricing. In the long run, Harley-Davidson uses hybrid costing to determine the retail prices of its bikes.
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References
Mulvenna, K. (n.d.). Harley Davidson . Academia.edu - Share research. https://www.academia.edu/6542207/Harley_Davidson
