CITGO

Definition

CITGO is a large, vertically integrated petroleum corporation that engages in refining, marketing, and transporting gasoline, lubricants, petrochemicals, and other industrial products. CITGO's operations can be studied to understand cost allocation in complex production environments.

5 Must Know Facts For Your Next Test

1. CITGO uses job order costing for custom orders and specific projects within its diverse product lines.
2. The company must track direct materials, direct labor, and manufacturing overhead for each job to accurately allocate costs.
3. Cost accumulation at CITGO involves both job order costing and process costing methods due to the variety of their operations.
4. Job order costing is essential for CITGO when dealing with customized refining processes or tailored customer requirements.
5. Understanding CITGO's costing methods helps illustrate the practical application of managerial accounting principles in a real-world context.

Review Questions

• How does CITGO utilize job order costing in its operations?
• Why is it important for CITGO to track direct materials, direct labor, and manufacturing overhead separately?
• Can you explain how both job order and process costing might be used at CITGO?

Related terms

Job Order Costing:

Costing method where costs are assigned to specific jobs or batches.

Process Costing:

Costing method where costs are averaged over continuous units produced during a period.

Manufacturing Overhead:

All indirect costs associated with the production process.