Question

What are the major differences between job-order costing and process costing systems? Give an example of a well-known company that might use job-order costing and an example of a well-known company that might use process costing. Explain why you have chosen the companies that you did, specifically why job order costing or process costing are used. Do not choose companies that your classmates have already commented upon. Participate in follow-up discussion by critiquing your classmates' choices of companies.

Please include proper citations in your discussion post.

Please provide a original answer.

Answer 1

1.Job costing is primarily used by the companies when they are producing different types of customized products on customer demand or no work orders whereas process costing is a continuous process where output of one process is used as the input of other process till the product reaches its final stage.

2. Job costing uses a customized method of production based on the requirement. Process costing uses a standarized method of production same for every product in that process.

3. A job cost sheet is prepared to arrive at the cost of the job. Under process costing different process account is created to find the cost of the each process.

4. Job costing is used for the products which are unique in nature hence a different job sheet is require every time but since process costing is require for standarized products no different process account is required.

5. Companies like KPMG uses job costing because requirement of each client is different from other whereas companies like Coca cola uses process costing since they produce the same product in batches.