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Under Armour is the fastest-growing sportswear company in the world. Known for its high-tech fitness apparel and celebrity endorsers such as Stephen Curry, in 2016,

“Under Armour is the fastest-growing sportswear company in the world. Known for its high-tech fitness apparel and celebrity endorsers such as Stephen Curry, in 2016, Under Armour introduced customized, 3D-printed shoes to its product lineup. The Under Armour Architech training shoes feature a 3D-printed midsole that increases stability during exercise. To create the 3D-printed elements, computers create an accurate 3D model of a customer’s foot using photographs taken from multiple angles. Under Armour then prints the midsoles in their Baltimore, Maryland lab and stitches them into the Architech shoes, which are traditionally manufactured ahead of time. The result is a customized pair of shoes tailored for each person’s unique feet.

3D-printed shoes, like Architech, use a hybrid-costing system. Accounting for the 3D printing of the midsoles and customization requires job costing, but the similar process used to make the shoes they are stitched into lends itself to process costing. The cost of making each pair of shoes is calculated by accumulating all production costs and dividing by the number of shoes made. In other words, while each pair of Architechs is different, the production cost is roughly the same. The combination of mass production with customized parts is called mass customization. 3D printing enables mass customization by allowing customers to tailor specific elements of certain products to their specifications or wants. Along with athletic shoes, 3D printing is letting people create personalized jewelry, earphones, and mobile phone cases. While 3D printing is still in its infancy, by 2020 the market for 3D printers and software is expected to eclipse $20 billion.”

Regarding process costing, discuss the following:

  • Distinguish between job order costing and process costing. What types of products would be produced using a process cost system?
  • What is an "equivalent unit of production," and why is it a necessary concept to employ in a process costing system?
  • Explain how Under Armour uses a hybrid system for production of their customized 3D shoes.

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