Understanding Costing Methods in Managerial Accounting

School: Southern New Hampshire University - Course: ACC 202 R2189 - Subject: Accounting

Module Three: Costsing Methods Ryan Edwards Managerial Accounting (ACC 202) Southern New Hampshire University

Company Overview The United States Postal Service (USPS) is one of the few government agencies specifically authorized by the United States Constitution. This aspect alone has interested me as there are currently a multitude of governmental agencies but very few that have existed at the inception of the United States Constitution. There are a handful of competitors, but the USPS currently holds a monopoly on letter delivery and that outlook is unlikely to change. The USPS would be considered a service organization as it provides letter and package delivery, money order services and are the sole organization responsible for processing passport applications within the United States. The organization has faced its share of financial setbacks as they have continued to report operating losses over the last decade. This can be attributed to an assortment of factors and because of this and it being my current employer, I found it one of the more intriguing organizations to discuss and analyze regarding business and costing requirements. Costing Methods When a company or organization provides a product or service they have at their advantage, a few different costing methods to help create profit and manage costs.These different methods can be used to measure and report products costs, allowing the organization to make pricing decisions. Service industries, such as the USPS, are more than likely to use a job order costs system. This system allows organizations to record costs incurred based on the service provided. Each customer that organizations such as the USPS service, are going to require different services or products and the costs associated with each is determined based on each "job" being completed. Another costing method, commonly used within the manufacturing industry, is the process costs system. This allows organizations to record and report product costs from each manufacturing department throughout the process of producing a produc