![Managerial Accounting: Creating Value in a Dynamic Business Environment](https://www.bartleby.com/isbn_cover_images/9781259569562/9781259569562_largeCoverImage.gif)
Concept explainers
Explain the primary differences between job-order and
![Check Mark](/static/check-mark.png)
Explain the primary difference between job-order costing and process costing.
Explanation of Solution
Job order costing: Job order costing is one of the methods of cost accounting under which cost is collected and gathered for each job, work order, or project separately. It is a system by which a factory maintains a separate record of each particular quantity of product that passes through the factory. Job order costing is used when the products produced are significantly different from each other.
Process Costing: It is a method of cost accounting used by an enterprise with processes categorised by continuous production. The cost for manufacturing those products are assigned to the manufacturing department before the averaged over units are being produced.
Explain the primary difference between job-order costing and process costing.
Basis | Job order costing | Process costing system |
Work-in-process inventory Transfer of costs |
Job order costing contains one work-in-progress inventory account, along with a subsidiary ledger having individual job cost reports for each job Costs are transferred to finished goods inventory account once the jobs are completed under job order costing. |
In process costing separate work-in-process inventory account for each department or process. Costs are transferred at the end of the period to the subsequent department for additional processing and, for those products completed; costs are transferred to finishes goods inventory under process costing systems. |
Table (1)
Want to see more full solutions like this?
Chapter 4 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Additional Business Textbook Solutions
Financial Accounting: Information for Decisions
Intermediate Accounting (2nd Edition)
Financial Accounting
Introduction To Managerial Accounting
Accounting for Governmental & Nonprofit Entities
Horngren's Accounting (12th Edition)
- Explain how process costing differs from job order costing.arrow_forwardWhat are the two main things that an activity-based costing system attempts to accomplish relative to direct and indirect costs?arrow_forwardWhy are there conversion costs in both job order costing and process costing?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305087408/9781305087408_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)