Job Order Costing :: essays research papers

Process costing is used for homogenous products (continuous flow processes such as producing cans of soda). Job-order costing is used in situations where the organization offers many different products or services, such as in furniture manufacturing, hospitals, and legal firms. Process costing is used where units of product are homogeneous, such as in dredge milling or cement production.The purpose of a job order costaccounting system is to assign and accumulatecosts for each job, i.e., an order, a contract, a unitof production, or a batch. Job order costingshould be used if the production or service isbeing performed to meet node specificationsor requirements, if different components aremade for inventory, or projects are undertaken toconstruct real property. Job order costing allows more than control, less estimation, and more channeliseand reliable allocation of costs.. Differences between job-order and process costing. The differences between job-order and process costing oc cur because the flow of units in a process costing system is more or less continuous and the units are essentially indistinguishable from one another. Under process costinga. A single homogenous product is produced on a continuous basis over a long period of time. This differs from job-order costing in which many different products may be produced in a single period. b. Total costs are accumulated by department, rather than by individual job.c. The department production report is the key document covering the accumulation and disposition of cost, rather than the job-cost sheet.B. Overview of Process Costing. Manufacturing costs are accumulated in impact departments in a process costing system. A processing department is any location in the organization where work is performed on a product and where materials, labor, and overhead costs are added to the product. Processing departments should also grant two other features. First, the activity performed in the processing department s hould be essentially the same for all units that pass through the department.