Question

(a) Distinguish between the two types of cost accounting systems. (b) May a company use both types of cost accounting systems? Give an example why or why not as it relates to the health care field.

Answer 1

a)

Job order costing system-This cost accounting system assign the costs separately for each job. This type of cost accounting system is appropriate for a company which produces special product on orders.

Process costing system- This cost accounting system accumulates costs each process wise. This costing system is used by companies which produces  goods in a process involving different departments and costs flow from one department to another.

b) Company sometimes uses both (process and job costing) costing system (better known as hybrid costing system) where the companies produces both unique products and largely homogenous products viz breakfast cereal.