Question

Difference between job costing and process costing

Answer 1

Answer:

The following are the key differences between job costing and process costing

Explanation:

1. The costing method which is used for the ascertainment of the cost of each job is known as Job Costing. Conversely, by process costing, we mean the costing technique used to determine the cost of each process.
2. Job Costing is performed where the products produced of a specialized nature, whereas Process Costing is used where standardized products are produced.
3. In Job Costing, the cost is calculated for each job, but in Process Costing the cost of each process is calculated which is then dispersed over the number of units produced.
4. In job costing the cost center is the job itself while the process is the cost center in case of process costing.
5. In job costing each job requires special treatment. In process costing, no such special treatment is required for each process.
6. There is no transfer of cost in job costing, from one job to another. However, the cost of the last process is transferred to the next process in the process costing.
7. The possibility of cost reduction is very less in Job Costing. In contrast to Process Costing, the scope of cost reduction is comparatively high.
8. In Job Costing, the cost is ascertained after the completion of the job, but in Process Costing, the cost of each job is determined.
9. In job costing, losses are not bifurcated. On the contrary, in process costing normal losses are ascertained carefully, while the abnormal losses are bifurcated.
10. In job costing, Work In Progress may or may not be present at the end of the financial year. As against this, Work In Progress will always be present, irrespective of the quantity, in the beginning, or at the end of the accounting period, in process costing.