Bennet Body Company

In accumulating the costs of production, Bennett Body Company uses job order costing whereas Conley Corporation uses process costing. Our company-Bennett Body Company- incurs high costs of paperwork as costing products is on per job order basis. The company’s products are based on client specifications and thus are unique from each other. In Conley’s, the system costs of production are on per department basis due to its standard design. In the present set up of Bennett Body Company, process costing does not seem applicable.

In the actual and standard costs of Conley system, there is cost differences noted as follows;

• Labor rate differences
• Production volume difference
• Labor efficiency difference
• Materials price and usage differences

Standard costs are obtained from the previous year’s experiences and accomplishments with some adjustments from managers of each department. In case our products are seasonal, our overhead allocation rate change should be monthly instead of annual. Otherwise, we could use the annual overhead rate to simplify computations.

Bennett Body Company should maintain its job order costing as it concentrates on the manufacture of customised trucks and each model that they produce may not be applicable in future demands as they occasionally receive requests that require changes on previous models.

Should Bennett modify its present system?

Bennett needs to improve its costing system, and in order to do so, they must include standard job costing so as to reduce paperwork costs and record keeping. This will allow management to assess the company performance as they can have a comparison of the actual production cost against standard costs established. This can make a good measure for operation control as standard job costing allows for incorporation of variances. The management can also prepare estimated production costs for future planning.