Question

similarities and differences of an operating costing system and process costing system

Answer 1

Similarities between Operating Costing System and Process costing System

1.Both costing systems are used in the Manufacturing industry.

2.Both costing systems are used for determining Cost of production.

3.Both costing systemsprovide with the  production report as a end result.

4.Both costing systems uses smiliar methods for calculating qunatity of units produced , cost per unit which are part of production report , the methods used by both systems are FIFO and Weighted average.

Differences between Operating Costing system and process costing system

1.Process costing is used when products are same , on the other hand operational costing is used when products are similar but there is slight variation .

2.Process costing is used generally to account for single manufacturing process, where one particular product is produced, where as Operational costing is a combination of both process costing and job order costing systems.

3. Methodology and application is different of both methods of costing.

4.In process costing costs are accounted by the department , while as operational costing uses some characteristics of job order costing , Costs are accounted as per stage of production.