Difference Between Job Costing And Process Costing
The main dissimilarities or difference between job costing and process costing can be described as follows:
1. Introduction
Job Costing: A costing method used to determine the cost of products produced as per customers' order or special contract.
Process Costing: A costing method used by processing firms to determine the cost of each process and operation.
2. Applicable
Job Costing: This costing method is applicable for unique products with small production.
Process Costing: This method is applicable for standardized products with large production.
3. Cost Calculation
Job Costing: It calculates the cost of each and every job separately.
Process Costing: It calculates the cost of each function, process and department.
4. Time
Job Costing: It completes with the completion of certain contract or job
Process Costing: It has fixed time frame to accumulate the cost
5. Cost Reduction
Job Costing: Job reduction is very difficult in this costing method.
Process Costing: It has a high scope of cost reduction
Also Read:
Also Read:
6. Cost Transfer
Job Costing: Product cost cannot be transferred to another job.
Process Costing: Process costs are transferred from one process to another process
7. Determination Of Unit Cost
Job Costing: Unit cost can be determined by using following formula
Unit Cost = Total Job Cost/Units Produced
Process Costing: Unit cost is process costing can be determined by using following formula:
Unit Cost = Total Process Cost/Unit Produced
Job Costing Vs Process Costing (Comparison Chart)
I hope this post is helpful to understand the difference between job costing and process costing and to make comparison between them.
Job Costing Vs Process Costing (Comparison Chart)
Basis
|
Job Costing
|
Process Costing
|
Introduction
|
Method that determines the cost of products which are produced as per special contract or order
|
Method that determines the cost of each process and operation
|
Applicable For
|
Unique Products
|
Standardized Products
|
Cost Calculation
|
Separate cost calculation of each job
|
Separate cost calculation of each process and function
|
Time Frame
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No fixed time frame
|
Fixed time frame
|
Cost Reduction
|
Difficult
|
Easy
|
Cost Transfer
|
No
|
Yes
|
Unit Cost Determination
|
Total job Cost/Units
|
Total process cost/Units
|
I hope this post is helpful to understand the difference between job costing and process costing and to make comparison between them.
