Question

Two primary Cost Accounting Systems are the job order cost system and the process cost system. Provide a brief description of each cost-accounting system.

Answer 1

Job order costing

Job order costing is a cost accounting system in which direct costs are followed and indirect costs are assigned to interesting and unmistakable jobs rather than departments. It is proper for organizations that give non-uniform tweaked products and services.

Job order costing is one of the two principle cost accounting systems, the other being the process costing in which costs are followed and assigned first to various processes did in various departments and then to products and services. Numerous organizations utilize costing systems that are a mix of highlights of both job-order costing and process costing systems.

process costing system

A process costing system aggregates costs when a substantial number of indistinguishable units are being delivered. In this circumstance, it is most proficient to collect costs at a total level for a vast bunch of products and then designate them to the individual units delivered. The suspicion is that the cost of every unit is the same as that of some other unit, so there is no compelling reason to track data at an individual unit level. The exemplary case of a process costing condition is an oil refinery, where it is difficult to track the cost of a particular unit of oil as it travels through the refinery.