Question

Describe both job order and process costing. Give an example of each and explain how each example fits its definition

Answer 1

Job order costing: job order costing is used in a small product industry. job oder costing works efficiently in the industry where multiple products(different from each other) are maufacture or the product is manufactured in batches.

for e.g. construction business, in construction business each construction is different and unique. therefore, job order costing will work efficiently.

Process Costing: Process costing is used for the businesses which works in process or the product are so huge which require different processes.

for e.g. Textile business, where to make fabric firstly cotton is processed into yarn and yarn into fabric.