Advantages and Disadvantages of Job Order Costing System - Assignment Example

The cons include the system's inability to focus on the departmental aspects of the organization rather than the single products. The application of this leaves the management with less information to make decisions. Under and over-allocation of costs may also occur through this system due to the allocation of costs (Ahmed). The system also ignores actual costs and considers the use of the standard overheads. A manufacturing company holds different departments that need an effective allocation of costs to ensure that the costing is accurate and all costs prove accounted for in the system.

The Job-Order Costing system takes to account the different costs that the products incur on an actual input. These take into account all the different products that the company produces but may ignore the costs of the different departments hence affecting the manufacturing process. These may provide wrong accountability for the manufacturing process and hence a negative effect. The application of the job order costing system on manufacturing companies provides a disadvantage to the management since it involves the need to use other costing systems that may provide a challenge.