Question

In job order costing is prepared for cost accumulation

Answer 1

Explanation:

Job costing and process costing have important similarities:

•Both job and process cost systems have the same goal: to determine the cost of products.

•Both job and process cost systems have the same cost flows. Accountants record production in separate accounts for materials inventory, labor, and overhead. Then, they transfer the costs to a Work in Process Inventory account.

•Both job and process cost systems use predetermined overhead rates to apply overhead.

Job costing and process costing systems also have their significant differences:

Types of products produced. Companies that use job costing work on many different jobs with different production requirements during each period. Companies that use process costing produce a single product, either on a continuous basis or for long periods. All the products that the company produces under process costing are the same.

Cost accumulation procedures. Job costing accumulates costs by individual jobs. Process costing accumulates costs by process or department.

Work in Process Inventory accounts. Job cost systems have one Work in Process Inventory account for each job. Process cost systems have a Work in Process Inventory account for each department or process.