Respond to…
Explain the similarities and differences between job order costing and process costing.
In your explanation, provide examples of when job order costing and process costing would be most appropriate.
There are various similarities and differences between the costing methods; job order costing and process costing and each concept plays a very specific role in a company’s allocation of costs. The most distinguishable is the differences of the two systems. For instance, job order costing focuses on a separate tracking of expenses that is expressly designated to one job or order (Schneider, 2017). Compared to the process costing method where the cost is assigned to a particular department. Another notable difference is that the process cost system assigns costs for a particular time period, whereas the job order system does not as it can be for any determined timeframe at any point.
While there are several differences both methods also share distinct similarities. For example, each concept has the same overall goal of defining the actual costs of product(s). Additionally, while the cost flows can also be noted as a difference the components of the cost flow are going to be the same as they both entail, inventory, labor, overhead, etc.
cabinet company the preferred method of costing. The job order costing method is going to be best suited for a business that produces custom made products or products that are produced for a particular customer and where each order is going to vary because of customer’s preferences.
An example would be a cabinet company where each order is going to be different and specific to the customers needs and wants therefore costs are going to vary. However, a company that produces a mass amount of the same product for a continuous or long-term basis is going to prefer the process costing system. A paper or gas company are usually going to prefer this method of costing.
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