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Job-cost and Process-cost systems

What are the differences between job-cost and process-cost systems? When would it be appropriate to use each type of system? What is the effect of each system on the product cost?

Solution Preview

The differences between job costing and process costing are as follows:
Job costing:
1) Job costing involves many different jobs being worked on during periods with each job having different requirements for production.
2) The individual job determines what the costs will be.
3) A job cost sheet is utilized as the main document which controls the cost accumulation by a job.
4) The cost per unit is calculated by the job on the job cost sheet.
Process costing:
1) A particular product is produced continuously or for long periods of time. All the units of the product are the same.
2) The costs incurred are totaled by the department.
3) The department’s production report is the main document which controls the cost accumulation and the distribution of the costs.
4) The cost per unit is ...

Solution Summary

Gives two pages of explanation of what the differences are between job-cost and process-cost systems.
Also, explains when it would be appropriate to use each type of system and the effect of each system on the product cost.

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