Question

Identify two most common types of product costing systems?

Answer 1

The two most common types of product costing systems are:

1. Job Order Costing: In Job order costing, manufacturing costs are ascertained for each job, batch or lot. The firms rendering services can also use job order costing. Each customer order is considered as job.

2. Process costing: In process costing, direct costs and indirect costs are assigned to each manufacturing process. Cost is ascertained at each stage of manufacturing process. This is extreme opposite to job order costing.

The other types of product costing includes Hybrid costing, Standard costing, Back-flush costing, Activity-based costing.