Job Order versus Process Costing Techniques - Research Paper Example

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Job Order versus Process Costing Techniques

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. Costs are first accumulated after which they are assigned to products and services. Job-order and process costing are the two main product costing techniques usually employed for accumulating and assigning costs to services and products. Process costing, according to Finkler, Ward, and Baker, are a costing technique, which involves assigning all units produced within a given period to the same cost (34). 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.
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). In contrast, in process costing system, the out-put units produced are given equal attention from each operation or production department. ...
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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 and will explore companies that can effectively use the two systems…
Author : mkoelpin

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