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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Describe the differences between process costing and job-order costing.

To determine

State the points of differences between process costing and order costing.

Explanation

Process Costing and Job Order Costing:

The costing method which is used to calculate the amount of cost incurred in each process is known as process costing. The costing method used to calculate cost incurred on each job is called job order costing.

Difference between process and job order costing are as follows:

BasisProcess CostingJob order Costing
DefinitionA costing method used to calculate the cost spent on each process or department is called process costing

A costing method which is used to calculate the cost spent by the organization on each job is called job order costing.

Type of product used forProcess costing is used to calculate the cost of mass production or homogeneous product.

Job order costing is used to calculate the cost of heterogeneous product.

Calculation of total costIn process costing, the total cost cannot be calculated before the process is completed.

In job order costing, total cost of job can be calculated before the completion of the job.

Table (1)

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