Essay On Process Costing

There are many types of costing method and among them process costing method and job order costing method are mainly applied in accounting system. Process costing , also called process manufacturing is the mass production of homogenous goods and services in continuous flow of step. In process costing, product and service pass through a series of sequential process. An important characteristics of process costing is the high level of standard in product and produce the same nature of goods and services or homogenous product. Likewise, Job order costing also called job order manufacturing is the production of unique nature of goods and services or heterogenous product. In job order costing different nature or unique nate of goods and services are produce.

In cost accounting system both job order costing and process costing are used. Process costing and job order costing are similar in that both

But mainly process costing method is applicable in manufacturing company and job order costing is applicable in service company. Most of the service companies meet customer need and requirement by performing and providing a customer service for a specific customer and job order costing involves meeting the need and requirement of customer by providing and performing customer job. For example : An advertising agency is one kind of service oriented company. It provides advertisement service to its customers as the need and requirement of customers. In advertising agency, customers have different needs and they want to advertise in different style and procedure as their need and want. Some customers wants to advertise in television, some in newspapers etc. Advertising agency involve meeting the need and requirement of its customers by providing service as needs and desire of customers. Hence advertising agency uses job order costing