Question

Explain Job costing and Process costing

Answer 1

Job Order Costing is used by Companies when they need to account separately for each type of job that was handled or completed. It accounts the specific costs that were incurred particularly to a job and it also maintains separate cost sheets showing complete cost information of each job separately.

Process Costing is used by Companies when the production is mass and input of one product becomes the output for subsequent processes. Raw materials and other production costs are added in the first process and semi finished goods are moved to the next process from the first process, where few more materials and other production costs or sometimes only the other production costs are added in the second and subsequent processes until it reaches to the finished goods.