chneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors(2nded.) [Electronic version]. Retrieved from https://content.ashford.edu/
Respond to…
Job order is a cost summary for each job and a job cost system tracks each cost separately for each job or product (Schneider, 2017). This is different then process costing which separates costs by each department then combines all costs for a product or job from each department who worked on the product to determine a unit cost (Schneider, 2017). Job order cost system is typically used for smaller products or jobs. Managers can track the costs of a product or job to ensure a reasonable quote to the customer, (Bragg, 2018). In job costing the amount of labor and materials is different between the products, such as building construction (Schneider, 2017). When constructing a building there are different materials used throughout the process, and will be different for each building built, therefore the materials and labor will change depending on the floor plan. A process costing system is usually used for larger production or jobs. This is done when the job has the same materials, and cost for production. An example for process costing is manufacturing oil. You cannot determine the exact amount of producing 1 gallon of oil because it is produced in a larger batch. However, the combined cost can be divided by the amount produced to determine a unit price (Bragg, 2018).
Bragg, S. (2018). Job order costing system. Accounting Tools. Retrieved from https://www.accountingtools.com/articles/job-order-costing-system.html
Schneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from https://content.ashford.edu/
