In this paper, please discuss the three costing methods of job order costing, process costing, and activity-based costing. Define each method and explain when it is best suited to be used. Compare and contrast the methods and consider their benefits and shortfalls. Use the information provided to propose which cost method should be used to allocate costs. Wet Suit World is a company that manufactures wet suits for use with water sports such as snorkeling and scuba diving. The suits are made in sizes small through 3x extra large with levels of insulation layers of 2 millimeters, 5 millimeters, and 7 millimeters. They come in black with the Wet Suit World logo imprinted across the chest. The materials are the same for all of the suits, though they vary in thickness. All suits undergo the same production and quality inspection processes. There is no one "correct" answer to the proposed cost allocation method as long as the answer is well-supported based on the week’s learning. Superior papers will include the following when responding to the assignment question: Define the three costing methods. Explain when each is most appropriately used. Compare and contrast the methods, considering both benefits and shortfalls. Provide a well-supported proposal for the cost method Wet Suit World should use.

Check below for the Answer and Explanation

Explanation:

A. All the three costing which are Job order costing, process costing and activity based costing are the different types of concepts of costing as well as the different methods of costing.

B. JOB ORDER COSTING is a method of either assigning or allocating a cost to a specific unit product .

PROCESS COSTING is a method for assigning allocation of cost for mass quantity of product .

In ACTIVITY BASED COSTING cost is calculated on the basis of the activity, number of the activities and on the basis of classification of the activities.

C.Each of the three costing method which are job order costing, process costing and activity costing are costing that has their own benefits and shortfall in which No one can replace another or fulfill the deficiency of another because each of them costing method has their own different benefits and shortfalls.

The benefit is that for calculating the cost for a particular task or job the job order costing is been applied and for calculating cost on particular process the process costing is been applied while on calculating the cost of particular activity the activity based costing is been applied .

The shortfall of all these three are that no one can replace another one.

D. A well-supported proposal for the cost method Wet Suit World should use will be JOB ORDER COSTING.