Puller Corporation uses process costing to calculate the cost of its ubiquitous plastic door knobs, which are identical in all respects, and cost $0.25 each. Puller stores its plastic door knobs in an unfinished state and waits for customer orders before applying additional finishing operations.
The final finishing operation can involve either a chrome lamination operation, a spray on mahogany finish, or rolling in a tumbler that simulates distressed furniture. Each of these operations results in a different cost. The cost of additional finishing in chrome is $0.15, the mahogany finish is $0.05, and the tumbler operation is $0.12. Thus, the additional costs are signifi cantly different from each other, and will be completed in small batches, depending upon the size of customer orders.
Based on the variety of possible outcomes and the smaller size of production runs for finishing operations, Puller elects to keep its process costing system for the initial creation of plastic door knobs, but to switch to a job costing system to calculate finishing costs.