Job Processing And Process Costing Vs. Process Costing

According to accountingtools.com "Job costing involves the detailed accumulation of production costs attributable to specific units or groups of units. For example, the construction of a custom-designed piece of furniture would be accounted for with a job costing system. The costs of all labor worked on that specific item of furniture would be recorded on a time sheet and then compiled on a cost sheet for that job..." For instance, Bombardier would use job order costing because there are different iterations of the planes they make according to customer configurations. Each plane that is made would need specific materials, manpower and processes to complete. Using job costing method allows the company to trace expenses and allow the company to find specific areas in the project to effectively and efficiently increase job production and cut expenses by analyzing the different processes aligned to building a

Job Costing signifies the costs encountered for each and every job whereas Process Costing signifies the costs encountered for different departments.

2. In case of Job Costing, a final value of the costs can be calculated beforehand whereas in Process Costing, the final value of the costs is calculated only at the end of the complete process.

3. The important documents needed to carry out Job Costing are much different from those needed for Process Costing.

4. Job Costing is typically used by industries that manufacture customized and heterogenous products whereas Process Costing method is used by the industries that are involved in mass production of homogenous products. In conclusion there are differences and advantages of both methods regarding the specific industry that the company is in business for. Job Costing is for heterogenous products that can be customized and altered to many iterations of the production line whilst Process Costing is for more homogenous products, which have a consistent, continuous process in its development in large