Question

From this week’s reading, reflect on the difference between (and the importance of) process costing and job-order costing.

https://www.youtube.com/watch?v=Uw_52M9GLbg

https://www.youtube.com/watch?v=guZc84c5HNI

Answer 1

DIFFERNCE BETWEEN JOB ORDER COSTING AND PROCESS COSTING

JOB ORDER COSTING	PROCESS COSTING
1)Heterogeneous jobs	1)Homogeneous jobs
2)Cost accumulated jobs wise	2)Cost accumulated department wise
3)Cost sheet is the key document	3)Departmental product report is the key document
4)Many different jobs are worked in different periods	4)A single product is produced either on continued basis or on long terms periods.

IMPORTANCE OF PROCESS COSTING AND JOB ORDER COSTING ARE:

1) It allows manager to get detailed information on the production statistics of individual departments or workgroups.

2)It allows the managers to calculate the profit earned on individual jobs,helping them to better ascertain whether specific jobs are desirable to pursue in future.

3) Job order and process costing are adequate to determine the average cost of each unit produced.