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Week 1, DQ 2 - are different from those in the text Job...

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Week 1, DQ 2 When is it appropriate to use process cost systems versus job-cost systems? Companies use costing to keep track of where in the production and distribution process their money is being spent. In order to control these types of costs, a company must understand them. Choosing the appropriate type of costing is important to a company, depending on industry and the product that they produce. Process costing is better suited for a company that makes uniform or homogeneous products. Process costing is a process that averages the costs over all incoming units to the per-unit cost. Process costing is tracked using a WIP (work-in-process) account on each department. A job-costing system is better suited for a company that manufactures products where orders are in differentiated batches. Compare and contrast the differences between the two and cite real-life examples that
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Unformatted text preview: are different from those in the text Job costing is the process of dealing with the cost determination of jobs or orders. Job costing is better suitable for production environments, where the next order can be different from the previous order. Examples of where job costing is used are: an automobile repair shop, where different parts are needed for different vehicles; and a company that produces custom shoes. Process costing is used to ascertain the cost per unit of product in an environment where the identical product is produced for all customers. Process costing is better suited for environments where the identical product is to be produced, for example an automobile assembly line. Another example of where process costing can be used is in a company that produces breakfast cereal (say Cheerios)....
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