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Contrast Job Order and Process costing. Be specific in explaining why you would use one over the other. Name a company, based on
Finance & Accounting
Pages 5 (1255 words)
Job Order versus Process Costing Techniques Introduction Costing is one of the counting techniques used by companies’ manufactures goods and services to ascertain the labor, material expenses, and overheads incurred in operations. This is very crucial costing enables a company to know with certainty the materials needed, labor requirements and the overheads incurred for planning purposes.
Job-order costing, on the other hand, is a costing system that ascertains separately the costs incurred for producing the units for each job (Finkler, Ward, and Baker 34). The two costing techniques have certain differences, which makes them suitable for certain companies and not in others. This paper seeks to explore the differences between job-order and process costing systems. In so doing, the paper will highlight why one of the costing systems will be preferable for use over the other. Finally, the essay will explore companies that can effectively use the two systems based on the analysis of the differences between the two costing approaches. To begin with, before assigning costs to products and services, it is always necessary to accumulate the costs involved in the operation. This ensures that the company effectively determines all the overheads, labor, and material expenses involved in the operation. The two systems have several differences that distinguish one from the other. Firstly, in job-order costing system, jobs are given varying degrees of attention and skills from each operation or production department (Kinney and Raiborn 207). ...
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