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Job costing versus process costing

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Please give examples of what types of companies may engage in job-costing and what types of companies that may engage in process-costing. Be specific in your examples and support your argument from the product or service that your organization delivers.

Discuss your thoughts on the single-driver approach to allocating manufacturing overhead. What are your thoughts about how the calculation is prepared? By using budgeted costs divided by budgeted output, what types of surprises may be lurking at the end of the fiscal year.

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Please give examples of what types of companies may engage in job-costing and what types of companies that may engage in process-costing. Be specific in your examples and support your argument from the product or service that your organization delivers.

First, let's describe the differences between job-order costing and process costing and the types of situations where each might be used. What characteristics of each process make it most appropriate for these situations?

Job Order Costing
This costing method is used when you have products or batches that differ from each other and so each product or batch may have different costs.

Job Order Costing tracks the costs that are assigned to each job. A job can be for many units (like a batch of coffee beans being baked) or one unit (building houses). Direct costs incurred (materials, labor) are assigned to individual jobs and overhead is assigned based on predetermined rates from overhead pools. So, each job will have their own work in ...

Solution Summary

Detailed instruction on the differences in costing methods and discussion about pros and cons of single drivers versus multiple drivers.

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See Also This Related BrainMass Solution

EECL Job Order Costing vs Process Costing

EEC has introduced a new 1.5 gigabyte (GB) computer memory chip.

Should EEC use a job-order costing system, which is a costing system where costs are collected and assigned to units of production for each individual job, or a process costing system, which is a costing system that accumulates production costs by process or department for a given period of time, to report the costs of this new product?
How are the systems different?
Describe how the selected system would work to track the costs of the product.
Identify the cost driver, and explain the process of tracking the costs.
Provide examples of products that EEC might offer for which a job-order costing system would be appropriate.
Provide examples of products that EEC might offer for which a process costing system would be appropriate.

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