Page 236 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes difference between Process Costing and Job Costing
The main differences between process costing and job costing are as follows:
S. No. Process Costing Job Costing
(i) In process costing production is a In job costing production is carried on
continuous flow and the products are by specific order.
standardized.
(ii) processes are related to each other. Various jobs are separate and
products also lose their individual entity. independent.
(iii) In process costing, costs are calculated at In job costing, costs are calculated when a
the end of period under each process. job is completed or finished.
(iv) In process costing, transfer from one In job costing there is normally no
process to another is an usual feature. transfer from one job to another. It will
be only when there is surplus or excess
production.
(v) Cost are compiled on time basis : for Costs are determined by Jobs or batches
production, for a given accounting period, of products.
for each process.
(vi) In process costing, production is In job costing each product unit is different
homogeneous, stable and controllable. and therefore more managerial attention
is needed for proper control.
(vii) The unit cost of a process, which is In job costing unit cost of a job is
computed by dividing the total cost for calculated by dividing the total cost by
the period into the output of the process units produced in the lot or batch in the
during that period, is an average cost for period.
the period.
(viii) production in process costing is continuous In job costing there may not be opening or
and therefore there is normally work-in- closing work-in-progress in an accounting
progress at beginning and closing. period.
difference between Batch Costing and Job Costing
Batch costing does not differ from job costing in respect of accounting procedure. There are two
points of differences between batch costing and job costing. They are:
(a) Under batch costing, a batch of articles produced constitutes a cost unit. But under job
costing, each and every job is treated as a cost, and
(b) Under batch costing, production is taken up to be held in stock sold on demand and also a
receiving specific order from customers. On the other hand, under job costing, production
is undertaken only against specific orders.
Self Assessment

Fill in the blanks:
1. …………………… is similar to job costing.
2. Most of the costs of a contract can be allocated …………………… to the contract.
3. When several contracts are running at different areas, …………………… is normally
sectionalized.
4. …………………… pertains to construction while the job costing is confined to production.
5. When materials, plant, etc. are transferred from the contract, the contract account is
…………………… by that amount.

230 LOVELY PROFESSIONAL UNIVERSITY