Concept explainers
Briefly describe the difference between job order and
Concept introduction:
Job order costing:
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Process Costing System:
As its name suggests, process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete for example the production of shoes from leather goes through cutting, stitching and policing processes.
To indicate:
The difference between the Job order costing and Process Costing System
Answer to Problem 1Q
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. Process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete.
Explanation of Solution
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete for example the production of shoes from leather goes through cutting, stitching and policing processes.
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Chapter 3 Solutions
Connect 1-Semester Access Card for Managerial Accounting
- Give some examples of service firms that might use job-order costing, and explain why it is used in those firms.arrow_forwardWhat is different between the journal entries for process costing and that of job order costing?arrow_forwardCan process costing be used for a service organization? Explain. Describe how process costing can be used for JIT manufacturing firms.arrow_forward
- Which of the following production characteristics is better suited for process costing and not job order costing? Each product batch is distinguishable from the prior batch. The costs are easily traced to a specific product. Costs are accumulated by department. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process.arrow_forwardWhich of the following product situations is better suited to job order costing than to process costing? A. Each product batch is exactly the same as the prior batch. B. The costs are easily traced to a specific product. C. Costs are accumulated by department. D. The value of work in process is based on assigning standard costs.arrow_forwardHow do firms collect job-related information on driver usage in an activity-based costing system?arrow_forward
- Why are the accounting requirements for job-order costing more demanding than those for process costing?arrow_forwardExplain the concept of a cost/benefit decision and how it relates to job costing systems.arrow_forwardWhen using job order costing for a professional service business, the primary product (service) costs are: A.Direct Materials and Overhead B.Direct Materials and Direct Labor C.Direct Materials. Direct Labor, and Overhead D. Direct Labor and Overheadarrow_forward
- During production, to what are the costs in job order costing applied? A. manufacturing overhead B. cost of goods sold C. each individual product D. each individual departmentarrow_forwardDiscuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs.arrow_forwardIf a job order cost system tracks the direct materials and direct labor, why doesn't It track the actual overhead used for a specific job?arrow_forward
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