Which of the following is not a way in which management can use job cost information?

Which of the following is not a way in which management can use
job cost? information? A. Assessing and comparing the profitability of each product
type B. Using the cost information in determining the bid price for
custom orders C. Preparing the financial statements D. Determining the balance in raw materials inventory

General guidance

Concepts and reason
Management accounting: Management accounting measures, analyses, and reports financial and nonfinancial information in taking decisions and implementing strategies. Various daily decisions are supported by management accounting. Some of the major uses include accepting potential order, making custom order bid, disposal of a product etc…

Fundamentals

Job costing: Job costing accumulates costs of completing a particular customer order. It includes direct materials, direct labor used, overhead applied to the job, and any specific costs incurred for the completion of the job.

Step-by-step

Step 1 of 2

Assessing and comparing profitability of each product type: job order costing is used to accumulate costs of different customer orders. Information in job order costing can be used in assessing and comparing the profitability of each product type.
Using the cost information in determining the bid price for custom orders: each customer order is generally unique and requires materials, labor, and overhead amounts. All costs related to the job can be used in quoting the price for customer bid.
Preparing the financial statements: Job cost information contains all costs in completing a particular job. This cost information can be summarized and used in the preparation of financial statements.

Job cost information can be used in assessing and comparing the profitability of each product type, in determining the bid price for customer orders, and preparing the financial statements.

Cost information can be used in determining the bid price for customer orders. Considering it not a way in which management can use job cost information will be incorrect.

Answer choice which is not a way in which management can use job cost is identified form the given answer choices.

Step 2 of 2

Job cost information can make little use in determining raw materials inventory balance. Raw materials can be used in job orders as well are part of manufacturing overhead. It is not possible to determine total material usage using job cost information.

Management cannot use job cost information in determining the balance in raw materials inventory.

Raw materials inventory is its opening balance plus purchases less usage during the period. Job cost information does not provide full raw materials used during the period. Only direct materials used are available from job cost records but not indirect material usage.

Job cost information cannot fully support determination of ending raw materials balance. Considering it as a way management can use job cost information will be incorrect.

Answer

Management cannot use job cost information in determining the balance in raw materials inventory.

Answer only

Management cannot use job cost information in determining the balance in raw materials inventory.