Compare And Contrast Job Costing And Process Costing

1. Briefly compare and contrast job costing with process costing. Provide an example of process costing.

Because job order costing, in accounting as we know it, uses a method where the costs are "gathered by job or order."(Walther, 2017), and thereby meaning that costs are accumulated per job. Companies that use job order costing would be firms that have a variety of different products or services (e.g. specialized services, custom orders, etc.); one example of such a company would be that of music studio 's. They create label 's and records for different artists – artists which may have different needs or requests, such as longer studio hours to record songs, etc. To successfully record these direct labor hours or materials needed (music sheets, microphone), and overhead costs (facility rent, etc.), they all need to be accounted for separately and then brought together at the end. Another example, is that of my own business: interior design. I use job costing, because each client has a different request, such as whole house design or just 1 or 2 rooms designed; I can 't charge everyone the same amount, I 'd probably lose money and customers too for being overpriced if I gave everyone the same rate. That being said, job order costing helps companies and businesses like mine: "identify the trouble spots, so you can actually fix them, instead of thinking that your whole company is in trouble." (Majcher, n.d.).

Process costing is better suited for other companies.