Question 01: Select the name of the company and briefly explain the nature of its operations.
Cavco (http://www.cavco.com) is a leading designer and builder of manufactured homes, modular homes, commercial buildings, park model homes, and vacation cabins. We produce and sell some of the most widely recognized brand names in the industry including Fleetwood Homes, Palm Harbor Homes and Cavco Homes. The company’s insurance group, Standard Casualty, offers a range of insurance products for manufactured home owners and its finance subsidiary, Country Place Mortgage, supplies a variety of homebuyer financing options.
Question 02: Explain why and describe how the company would adopt job order costing system.
Job order costing system is a system of assigning product cost to the manufactured goods when each of the products is very different from each of the product.
Cavco adopts the job order costing system because they are a leading designer and builder of homes, modular homes, commercial buildings, park model homes and vacation cabins, so each of the product is far different that other product. People don’t want make their houses as other people did, they want a newer model of their buildings.
When Cavco is making every product different than previous than its material, labor and factory overhead cost are also different that other products and they need make calculations for each of the product separately. So Cavco adapts the job order costing system by making record for each of the product separately that is too much different than other products.
Question 03: explain one advantage and one disadvantage the company would face from using the job order costing system.
Advantage: Cavco is getting excellent costing as this system is providing a complete cost detail of the product so there is very less chance of loss from the product as we can obtain the product cost of each product precisely.
Disadvantage: Cavco’s record keepers Burdon is continuously increasing as it is very hard to find out the cost of each product with respect to each material, labor and overheads. This feature makes the job order costing system a complex and less attractive.
Value Addition comment on classmate’s Post
Ms. Omaima Ishaq Mohammad Amin Ahmed Hassan chooses an excellent company that is really using job order costing because every new order has new design and method and require new costing for it.
She also correctly mentioned the advantages and disadvanteges that pertain to the job order costing for the company
She also can write the complexity of the job order costing disadvantages when there are many orders and we need calculate accurately the cost of each product.
She should also explain that new designs need further expertise and skills that result to increase in the cost of the business and lead to low profitability.