ABKA647 Product Costing and Variance Analysis Assessment 2 2026 | The Career Academy NZ

Product Costing and Variance Analysis Assessment

Read the requirements below, then complete all parts of the assessment and then save your work as a Word Document or PDF file. Once you have saved your work click on the Assessment submission link within this topic and upload your completed assessment to your tutor for marking.

PART A 

Product & Process Costing

Question One

Explain the differences between job-order cost systems and process cost systems, with specific reference to tracking and applying costs. 

Job-order costing is used by businesses that produce customised products or small batches, where each job is unique. In this system, costs are tracked separately for each job using a job cost sheet, and direct materials, direct labour, and applied manufacturing overhead are assigned specifically to that job based on actual usage. A predetermined overhead rate is used to apply overhead to individual jobs, meaning each job may receive a different amount of overhead depending on the resources it consumes. In contrast, process costing is used when identical units are produced continuously, such as in manufacturing industries like chemicals, food, or textiles. Instead of tracking costs for individual jobs, process costing accumulates costs by department or production process for a given period. Direct materials and labour are not traced to individual units but are spread evenly across all units, and manufacturing overhead is applied to entire processes rather than specific jobs. Because production is continuous, the total costs of a process are averaged across all units, often using equivalent units to allocate costs between completed production and work-in-process. Thus, the main differences lie in how costs are tracked—per job versus per process—and how overhead is applied—either to individual jobs or evenly across a continuous flow of production. 

Question Two

Shaping Tools Limited creates surfboards and wooden furniture. You have been asked to calculate the cost of ending work in process inventory for the surfboard division using the details provided below: