Question

Discuss the differences between product costing and job costing. What type of company would general use product costing? What type of company would generally use job costing? Give a real world example of each and explain your reasoning.

Answer 1

Answer:

Employment costing:

Costs are gathered and amassed by occupations, contract, or activities. It is generally utilized when a the result is a particular item, and not a standard item. It is likewise utilized when the way toward assembling the item comprises of a few particular procedures which are attempted in a succession to fabricate a last item. (eg. in the attire business the procedures might be - cutting, sewing, coloring and so on)

Item costing:

Item cost alludes to the costs used to make an item. These expenses incorporate direct work, coordinate materials, consumable creation supplies, and processing plant overhead. Item cost can likewise be viewed as the expense of the work required to convey a support of a client. In the last case, item cost ought to incorporate all costs identified with an administration, for example, pay, finance assessments, and representative advantages.

The expense of an item on a unit premise is normally determined by arranging the expenses related with a bunch of units that were created as a gathering, and separating by the quantity of units made. The computation is:

Product unit cost = (Add up to coordinate work + Total direct materials + Consumable supplies + Total apportioned overhead) ÷ Total number of units

It is for the most part utilized when the last item is standard (eg cleansers)

Enterprises:

Occupation costing: Printing press, equipment, deliver building, repairs, and so on.

Item costing:   pharmaceutical or medication businesses, instant piece of clothing, TVs and so forth.