In: Accounting
5. The completion of goods is recorded as a decrease in the work in process inventory account when using:
Job-order costing/ |
Process costing |
No/No |
Yes/No |
No/Yes |
Yes/Yes |
Answer: Job order costing -Yes/Process costing -Yes | |||
Reason: | |||
Let us first look at what is job costing and process costing | |||
"Job costing involves the detailed accumulation of production costs attributable to | |||
specific units or group of units." | |||
"Process costing involves the accumulation of costs for long production runs involving products | |||
that are indistinguishable from each other." | |||
We can analyze the difference between job costing and process costing below | |||
JOB COSTING | PROCESS COSTING | ||
1 | Cost accumulate job wise | Job accumulate department wise for production | |
2 | Many different jobs are worked in | A single product is produced either on continuing basis or on | |
different period | long-term periods | ||
In both the cases production recorded in separate account for material inventory, labor, and overhead | |||
then transfer to a work in process inventory account. After completion of production, the good recorded as | |||
a decrease in the work in process account. Once job completed the cost of particular job is decreased from the | |||
work in process account in Job Costing. Once a production completed, the completed goods decreased from | |||
work in process account in process costing. | |||