Answer to Question #244392 in Management for bili

Question

Explain cost accounting and its functions as well the distinguishing features of cost accounting systems for (a) job order costing, and (b) process costing

Answer 1

Job-order Costing: This is a cost accounting technique that allocates and monitors manufacturing costs consistent with the number of occupations. At this point, jobs can allude to constructing a single product or implementing a remote procedure. Job-order costing is primarily utilised when the products are distinguished, and none of them has comparable systems.

Process costing: This is a cost accounting technique that dispenses and monitors manufacturing costs attributable to numerous industrial procedures rather than a single occupation or operation. It is commonly employed by businesses where different products have a uniform process of manufacture.

Based on the above description of both approaches of costing, we can examine the following dissimilarities.

a) Job costing is employed for exceptional products, while process costing is utilised for uniform products.

b) For bigger productions to operate encompassing multifaceted procedures, process costing is favoured as equated to job order costing that is ideal for undersized production operations.

c) Job costing is better where customers place a personalised order. The company can compute the cost for every job and add an even-handed edge to bill the customers, but process costing is not appropriate in such circumstances.

d) Job-costing might consist of more cost because of bonus documentation encompassed as in a vast company it might necessitate a lot of individuals to organise cost accounts for each job while cost included in process costing will be fewer as it will be uniform procedures and can be completed by few experts.