Work #1:Explain in your own words why you believe planning is important. Select one of the following businesses: a large bank, a government agency, or a hospital, and explain which systems you feel ar

Running Head: Costing

Process Costing

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Company chosen: Boeing Co.

Boeing is the biggest aerospace company globally and the leading manufacturer of security systems, commercial jetliners, space, and defense. Being the United States leading manufacturing exporter, Boeing’s tailored services and products include advanced communication and information systems, weapons, satellites, military, and commercial aircraft as well as a wide range of systems like launch, defense, and electronic. Besides, Boeing also provides performance-based training and logistics in one hundred and fifty nations for airlines and the customers of the United States.

The most appropriate method of costing for Boeing is process costing due to the company’s mass production. Process costing is a costing method commonly employed in manufacturing in cases where units are constantly mass produced via several productions (McCurdy, 2019). It is suitable where products that are almost identical are mass produced. In process costing, costs build up over a given period are assigned to the units produced during the specified time frame. There are different forms of process costing including first-in first-out, standard costing, and average costing. The weight average costs are the simplest form of process costing. It groups costs and assign the resulting collective costs to the sum unit produced. It is “calculated by dividing the cost of goods available for sale by the number of units available for sale.” (Basu 2020)

The standard costing is the same as the weighted average costing, but the standard costs approach is more of planned costs rather than actual costs. The first-in first-out costing method is a bit complex than the other types. It is employed when there is a considerable change between production periods, and it develops cost layers for differentiating between the units launched on the preceding production period with the units started in the underlying period. Process cost is beneficial since small costs and less clerical efforts are adequate in calculating costs and effective control can be applied in production.

References

Basu, T. (2020). PROCESS COSTING.

McCurdy, H. E. (2019). Boeing: Pairing Commercial Work with Government Contracts to Reduce Risk. In Financing the New Space Industry (pp. 37-44). Palgrave Pivot, Cham.