Question

1. identify 3 differences between job order and process costing

2. Identify 3 similarities between job order and process costing

3. how do we computer the equivalent units of production for material what items are included in the computation

Please help me with this.

Answer 1

Part 1

Job order costing is for costing individual or unique products in small production runs whereas process costing is for costing standardized products in large production runs.

All direct costs are attributable to individual job in the job order costing. In process costing all costs are allocated to process instead of individual jobs.

More amount of record keeping is involved in job order costing compared to process costing. In job order costing, job card is to be maintained for each job separately. The allocation of costs separately to individual jobs increases the amount of entries. Whereas there is aggregation of costs in process costing which reduces the amount of entries in record keeping.

Part 2

In both methods, all direct and indirect expenses are allocated to the end products in a manufacturing process.

Accounting entries used to record inventory accounts are almost same for the both methods of costing.

Manufacturing accounts like direct material, direct labor and manufacturing overheads are maintained in the both methods of costing.

Part 3

Equivalent Units of Production for materials = equivalent units to complete beginning inventory + units started and completed during the period + equivalent units in ending work in process inventory.

Thus,

Beginning inventory, units started and completed during the period and ending work in process inventory are included in the computation of equivalent units of production for material