Reference no: EM132552626

The comparisons between both contrast job order and process costing systems is the collection and allocation of costs to any unit of production. The key difference is that job order is based on manufacturing per customer orders and is customer specific on the other hand process costing is the allocations cost for standardized manufacturing. According to Job Costing (2019), "Job costing involves the accumulation of the costs of materials, labor, and overhead for a specific job. This approach is an excellent tool for tracing specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs. An alternative use is to see if any excess costs incurred can be billed to a customer." An example of job costing system is when there is a $60,000 worth of raw materials on an account and the manager debits the material inventory for $60,000 and credits the accounts payable for $60,000. "Process costing is the optimal costing system when a standardized process is used to manufacture identical products and the direct material, direct labor, and manufacturing overhead cannot be easily or economically traced to a specific unit." (Cooper, Franklin, Graybeal, 2019). An example of the process is the production of cookies at Nabisco, the production process used to track the direct materials from making dough for the cookies, processing of baking cookies and final production of the cookies.

Question 1: What else does job costing entail?