Question

What are the major differences between job-order costing and process costing systems? Give an example of a well-known company that might use job-order costing and an example of a well-known company that might use process costing. Explain why you have chosen the companies that you did, specifically why job order costing or process costing are used. Do not choose companies that your classmates have already commented upon. Participate in follow-up discussion by critiquing your classmates' choices of companies.

Answer 1

1. Differences of Job order Costing and Process Costing:

Job Order Costing	Process order Costing
The Job Order Costing is based upon the manufacturing cost of an individual	This is based upon the collecting and assigning the manufactured products which is produced
It records the each individual job work sheet and can see the each individual performance that how much he/she has produced	There is no proper time sheet for this process because the manufactured products are assembled and it move to the next step of production or department which we cannot capture the individual performance.

Example for Job Order Costing:

Franklin Templeton Investment, has the employees which their work is to make people to do the mutual investments, for that they have hired 200 sale personnels to sale their product through Digital marketing or in person marketing. In this we can see the each individual performance that how many mutual funds schemes has been sold to their client, based on that we can reward them the bonus based on their performances.

Example for Process order Costing:

ITC, which has manufacturing unit which is situated in Nagpur produces various food products like biscuits, Masala products etc. In this these are mass production areas which produces various products. Each product has its own processing level, which each processing level we have bunch of people to give one finished products, in this we can see the mass level production not as individual one.