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Oral Traditon

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Submitted By Richie1994
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Goodnight,
Discussion Forum Unit 6_ Session 2
Differentiate between Job Costing and Process Costing. Use examples to illustrate
Job Costing signifies the cost encountered for each and every job whereas Process Costing signifies the cost encountered for different departments. In the case of Job Costing, a final value of the costs can be calculated beforehand whereas in Process Costing, the final value of the cost is calculated only at the end of the completed process. Job Costing is typically used by industries that manufacture customized heterogeneous products whereas Process Costing method is used by the industries that are involved in mass production of homogenous products.

The cost object in job costing is a job that constitutes a distinctly identifiable product or service. The quantity of manufacturing resources is different in any job. It would be incorrect to cost each job at the same average manufacturing cost, So, when like or similar units are mass produced, process costing averages manufacturing costs over all units produced.
Examples of entities that use Job Costing and a situation where Job costing would be applied: Legal firm, Architectural firm, and accounting firm Carpenter making cupboard or cabinets uniquely for an individual. This is considered as Job Costing.
Examples of entities that use Process Costing and a situation where Process costing would be applied: Beverage industry, motor vehicle industry and oil refining.
When Bic (pen manufacturer) makes pen, they don’t make a Bic pen custom for you but they make numerous amount and put them on shelves and anyone can buy them. Process Costing would be applied in this

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