Question

1. List a total of 5 similarities/differences between process costing and job order costing.

Answer 1

Solution. Five similarities between process costing and job order costing are enlisted down:

1. Process costing and Job Order Costing methods are both used to determine product cost.

2.Maintains similar cost flow process and thereby similar .

3.Seperate heads to record and allocate expenses of material inventory, labor and overhead is maintained in both the above mentioned costing techniques.

4.Both above mentioned costing techniques encompasses manufacturing accounts(also known as T accounts) for direct material, direct labor and production overheads.

5.Both the above mentioned cost techniques helps in decision making activities by the internal management.

Five differences between process costing and job order costing are enlisted down:

1.Process costing encompasses mass manufacturing units and costs whereas, job order costing involves costing of individual job orders.

2.Maintenance job cost sheet is maintained under job order costing technique to record time allocated to a job by an employee, whereas no such is recorded and maintained under process costing.

3.Treatment of work-in-progress differs while job order costing only maintains for a specific job, process costing maintains at the beginning and throughout the manufacturing process under the head.

4.Cost under job order costing records for individual specific job whereas, in process costing entire process cost is recorded units wise.

5.Markets accepting job order costing are one which encompasses individual level for example that of a hospital. Whereas, process costing encompasses businesses performing various levels of different activities.