Question

In your own words describe in detail what Job Order Costing is, how it is different to Process Costing, and how we apply overhead costs in the Job Order Costing environment.

Answer 1

Answer)

A job order costing is a type of costing for allocation of costs of different jobs in which the products produced in one job is sufficiently different from products produced in other jobs.

It is different from process costing add in process costing as processing costing is used when all the products produced are almost unlike which is not in job costing.

For example, Harley Davidson Bike manufacturers it if better to use prices costing as they may have different models but all models are produce in large quantities. Where as there will be customs bike manufacturers they use job costing as every bike the build will be different from other as they are based on the tastes of the customers.

There will be different allocation basis for allocation of manufacturing overheads and generally that are based on direct Labour hours and machine hours. Some of the examples are supervisor salary is manufacturing overhead allocated to job based on direct Labour hours where add another manufacturing overhead depreciation Is allocated on basis of machine hours.