Cost Accounting Vs. Job Order Costing System
Companies rely on two basic cost accounting systems that are consistent with the nature and quality of the product. The process costing, and the job order costing system, and these two systems are very important in cost accounting. I will present them in some detail as follows:
Job order costing.
The job order costing system is followed in the intermittent and diversified production projects in which production is carried out according to certain specifications. This system is also followed in the case of small enterprises that produce a product for a specific period of time and then move to produce another product for a specific period and then move to another product, and so this transfer requires knowledge of the cost of each order of a
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Written Assignment Unit 2 3
Process costing system is usually implemented in the companies whose production is characterized by the pattern and continuity, and producing a standard product with same specifications.
Actually, the importance of process costing system emerged with the technological development of machinery and equipment, which doubled the productivity of factories to satisfy the needs of consumers of standard products that are widely consumed.
It has become difficult and unproductive to track the costs of each production order as large-scale production is built primarily for the market as a whole and not for each individual customer.
Hence, it is necessary to obtain a cost system that provides information in a quick and practical manner and if it is relatively less accurate than the job order system.
“Many companies use some type of system to determine the minimum value of produced products.
Process costing is an allocation system companies use to allocate cost for homogeneous items produced by a company. Homogeneous products represent items that are very similar or indistinguishable from each other. Lumber, sod]/a pop and chemical products are a few examples of homogeneous
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