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Job costing-vs-process costing,manufacturing overhead rate

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1.Describe job-costing and process-costing systems. Explain when it would be appropriate to use each.

2.In a job-costing system, explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost allocation rate.

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Solution Summary

The solution explains the meaning of job costing,process costing and companies which use job costing and process costing and the need for using manufacturing overhead cost allocation rate in job costing.

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Job costing is the method of costing in which the cost of completion of a job is added to find out the total cost of the particular job and the resultant profit arising out of the job. Here flow of costs is identified by the job and not by the process involved. Example of Job costing ;Manufacturing Company making heavy machines and equipments.
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