Lecture 3 activities - answers job order costing.pdf -...

HAC112: Introductory Management Accounting
Lecture 3 activities – answers
Chapter 9: Cost Accounting – Job Order Costing
Discussion Questions
1
Discussion should centre around the nature of both job order costing and process costing.
Process costing is usually appropriate where there is a continuous production process in a mass-
production environment. Output is generally homogeneous, e.g. soft drink. In job order
costing, the identity of each job or product is kept separate and costs are assigned to each
job. Output is not homogeneous.
In job order costing, costs are assigned directly to each job and hence unit cost is given by
reference to total cost of the job. In process costing, total costs are accumulated and
divided by the number of equivalent units of production, to give the unit cost of
production per unit.
For the production of 100 cartons of cans of soft drink, the appropriate costing system would be
process costing for the total soft drink output, with total costs assigned to the particular
order of 100 cartons, obtained by multiplying unit cost by 100.