Concept explainers
Briefly describe the difference between job order and
Concept introduction:
Job order costing:
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Process Costing System:
As its name suggests, process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete for example the production of shoes from leather goes through cutting, stitching and policing processes.
To indicate:
The difference between the Job order costing and Process Costing System
Answer to Problem 1Q
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. Process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete.
Explanation of Solution
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Process costing system is the branch of cost accounting which is applied where production of a product takes more than one processes to complete for example the production of shoes from leather goes through cutting, stitching and policing processes.
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Chapter 3 Solutions
Managerial Accounting
- Can a company use both job order costing and process costing? Why or why not?arrow_forwardGive some examples of service firms that might use job-order costing, and explain why it is used in those firms.arrow_forwardWhy are there conversion costs in both job order costing and process costing?arrow_forward
- Explain the concept of a cost/benefit decision and how it relates to job costing systems.arrow_forwardCan process costing be used for a service organization? Explain. Describe how process costing can be used for JIT manufacturing firms.arrow_forwardHow do firms collect job-related information on driver usage in an activity-based costing system?arrow_forward
- Why are the accounting requirements for job-order costing more demanding than those for process costing?arrow_forwardWhat type of costing system do most service businesses use, and why do they use it?arrow_forwardWhat is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the productsarrow_forward
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