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In: Accounting

Many companies need to use both job costing and process costing. Discuss why this may be...

Many companies need to use both job costing and process costing. Discuss why this may be the case with appropriate examples.

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Expert Solution

Job costing is used to complete a specific job and to ascertain the cost of each job whereas the process costing is used to ascertain the cost of a product at each process or stage of the manufacturing.

In case of job costing end product of one job is the finished prodcut but in case of process costing end product of one process is the raw material for another/next process.

Example:

In case of textile fabric/clothing companies they have to use both job costing as well as process costing because they receive orders from various suppliers/vendors with different specification which require job costing at the same time each cloth passes through various process like Designing/Citting/Sewing/Pressing etc.

So these kind of companies require both type of costing process i.e. Job costing and Process Costing.

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.

ekkarill92 answered 1 year ago
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