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Activity- Based Costing & Process Costing

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Submitted By davion17
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Activity- Based Costing & Process Costing
Job Order Costing:
1. Many different jobs are worked on during each period, with each job having different production requirements.
2. Costs are accumulated by individual job.
3. Job cost sheet is the key document controlling the accumulation of costs by a job.
4. Unit costs are computed by job on the job cost sheet (Similarities between Job Order and Process Costing System, nd).
Process Costing:
1. A single product is produced either on continuous basis or for long periods. All units of product are identical.
2. Costs are accumulated by departments.
3. The department production report is the key document showing the accumulation and disposition of costs.
4. Unit costs are computed by department on the department production report (Similarities between Job Order and Process Costing System, nd).
The job order cost system is most suitable when the products differ in types of material and work performed. Thus, each product is made according to the customer's specifications and the price quoted is closely tied to estimated cost. Examples of types of companies which might use job order costing are printing companies and shipbuilding firms (Fletcher, nd).
The process cost system is commonly used where products are manufactured under mass production methods or by continuous processing. Industries using process costs are paper, steel, chemicals, and textiles. Assembly-type processes such as washing machines and electrical appliances would also use process costs (Fletcher, nd).
Job order costing system makes since for my company to start out with. Because for now I only offer one version of my product but in the future I plan to offer a variety of versions of it.
References
Fletcher, J (nd) Job Order Costing. Retrieved from http://sphinxsaver.net/html/job_order_costing.html
Similarities between Job Order and...

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