 In this presentation we will discuss the discussion question of discuss a hybrid costing system and when it might be used. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need then can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. When we're thinking of a costing system we're probably in the section where we're talking about in this case of course a process cost system if you see this outside of the context of a process cost system then it might be a little bit more confusing to think about what are they talking about a hybrid costing system so we can think that well it's a costing system so we're talking about a costing system here then therefore the two major costing systems that we want to default to all the time for a manufacturing type of company would be the process cost and the job cost system so typically that those are the two costing systems so we might want to start off if we see a discussion question or if we see an essay question that we're considering here a manufacturing type company typically and we're thinking about the costing methods of inventory or the production of inventory typically and the two major costing methods usually we think of them separately first just like we do with everything right we try to break everything out as if they're completely opposites or completely different because we want to compare and contrast to you know extreme points but in reality there could be of course situations where we would have some kind of hybrid between the two and that's going to be the case with many many different things that we tend we tend to break out into their extremes but in real reality they might be more somewhat of a continuum rather than one thing versus the other thing so in this case we have the job cost system and we have the process cost system those are the two major types of systems that we would have the job cost system typically used when we have different types of inventory that are totally different in nature and therefore we're going to track that inventory by particular job of the process cost system typically being in the case where we're making a lot of things that are all the same in nature and therefore we can have a process cost system and try to mass produce those items and therefore need to track things not by job but by process now you can think of a lot of different types of situations where you might say well what if I'm making something that needs some process costing stuff and some job cost stuff so if we're customizing something it may well be the case that we're actually tracking some of our inventory as it goes through work in process with a job cost and some with a process cost so for example if you think about something like a computer then you might say well maybe because some components of the computer all going to be the same you know they're all the same in all the computers and so maybe we crank that out in a process cost type system and then we'll say that some other parts of the computers might be customized such as the putting it together piece someone might make an order in a just-in-time system or something and we got to take all the pieces and put them together and that'll be customer different and that's going to have to apply to a particular job well in that case then we'd have to say all right well now we've basically got a process cost system to make all the pieces that are all going to be the same because obviously we want to do that in a process cost system and then we're going to have the job cost system set up when someone makes an order we can customize that order to a particular job possibly and make some type of job cost system and you could see that scenario in a different in a lot of different areas so I mean if we're making even if we're making some kind of custom cars or something like that or surfboards or something like that if we were actually to make the foam of the surfboard to produce it instead of buying it or something like that then the production of the materials would be the same the foam would be the same and then we would customize the shape of it and all that kind of stuff that would be custom that we might need some hybrid method there if we had custom cars or go-carts or something like that and we were actually producing the parts you can see that you know the product the production of a lot of the parts would then be standardized and we might customize some of the some of the process in terms of what people specifically want in in the car or the cart or whatever we have so we can see a lot of different types of situations where we might actually use some type of hybrid method especially in those areas where we're producing components of our our end product so for producing the components rather than just buying the components things like actually the hardware in the computer rather than just buying it and putting it together then you can see that we would have the process of putting together and we would have the process of the production of those components one being mass production type of format process costing the other being customized type of format job costing