Final answer:
Job-order costing is characterized by tracking direct labor, materials, and overhead to individual jobs, offering detailed cost insights for businesses with distinct, made-to-order products. It emphasizes the understanding of cost structure through analyses of fixed, marginal, average total, and average variable costs.
Step-by-step explanation:
The essential characteristics of job-order costing include the ability for a firm to track direct labor, materials, and overhead to individual jobs or orders.
This meticulous approach to accounting allows for precise cost measurements on a per-job basis, differing from process costing which is used for mass production where costs are averaged over all units. Job-order costing is crucial in industries where products are distinct and made to order, such as in construction, law firms, or medical procedures. The cost structure of a firm is vital for long-term profitability, as it combines insights from various cost measures like fixed costs, marginal costs, average total costs, and average variable costs.
These measures offer crucial perspectives for a business, enabling it to make informed decisions about production quantities and pricing that will maximize profits, especially when combined with sales and revenue analyses in specific market structures.
The complete question is: Which of the following are the essential characteristics of job-order costing? is: