Job Costing vs. Process Costing

Main Difference

The main difference between Job Costing and Process Costing is that Job Costing is the cost of the exclusive agreement, and the work is completing according to the customer need, whereas Process Costing is the cost calculating according to the numerous process.

Job Costing vs. Process Costing — Is There a Difference?
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Difference Between Job Costing and Process Costing

Job Costing vs. Process Costing

The job costing process is calculating according to customers’ requirements, whereas the process costing method is calculating according to numerous processes.

Job Costing vs. Process Costing

Job costing is focusing on the job; on the other hand, the process costing concentrates on the procedure.

Job Costing vs. Process Costing

In job costing, the rate of reduction is low; conversely, in the process costing, the rate of decline is high.

Job Costing vs. Process Costing

In the job costing, the production nature is customizing; on the flip side, in the process costing, the production nature is standardized.

Job Costing vs. Process Costing

In job costing, every job is requiring special treatment; on the other hand, in process costing, and there is no special treatment for every procedure.

Job Costing vs. Process Costing

There is no transferal of cost in job costing, whereas the value can relocate into the next process in process costing.

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Job Costing vs. Process Costing

The job costing is using for small production units; conversely, the process costing is using for large production units.

Job Costing vs. Process Costing

In the job costing, the cost is determining after completing the job; on the flip side, in the process costing, the price is determining the ending of the cost period.

Comparison Chart

Job CostingProcess Costing
It is the cost of an unusual contract and completed according to the client's needs.It is the cost calculating process according to the various methods.
Cost Focuses On
JobProcess
Reduction of Cost
LowHigh
Production Is
CustomizedStandardized
Individuality
YesNo
Scope
Using for a small production unitUsing for a large production unit
Transferring of Cost
Cannot transferCan transfer
Cost Discovers
After completing of jobEnding of the cost period
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Job Costing vs. Process Costing

The job costing is the process of calculating the cost of particular contracts, and the work is performing as per customer’s instruction, whereas the process costing is the method of calculating the cost performing to various operations. The production of the job costing is personalized, while the output of the process costing is identical. The mission of the job costing is to compute the cost of every work, whereas the purpose of the process costing is the charge is determining for the procedure firstly, and then spread to the producing elements.

The job costing calculation is depending on the situation, whereas the process costing estimate is depending on the process. In the job costing method, there is a low chance of reduction in cost, while in the procedure of process costing, there is a high chance of decline in value. There are no chances of cost transferring in job costing, whereas the cost can move from one procedure to another in process costing. In job costing, every job is different from another; that’s why all the products have their own identity, while in process costing, the products are continuously producing in a large amount; that’s why they don’t have any status.

In job costing, the losses are unusually not separating, whereas in process costing, the regular losses are carefully discovering, and the unexpected losses are dividing. The job costing method is suitable for those industries where the products are manufacturing according to the customer’s need, while the process costing is suitable for those industries where production is making in bulk.

What is Job Costing?

Job costing is the method of computing the rate of the exceptional agreements, and work is carrying out according to the customer’s order. The manufacturing of the job costing is personalized, The operation of job costing is to estimate the cost of every work, job costing calculation is depending on the situation, and In the job costing process, there are little probabilities of decrease in value. There are no chances of cost transferring in job costing; in job costing, every situation is different from another; that’s why all the products have their own identity.

In the job costing, the losses are unusually not separating. The job costing process is appropriate for those industries where the products are manufacturing according to the customer’s need and their demands; few examples are providing such enterprises, like furniture industry, printing industry, shipbuilding industry, and many more. Keeping the records in the job costing process is a tiresome task. The work in the process may or may not occur at the starting or the ending of the fiscal year.

Job costing is using in constructive industries where the rates fluctuate broadly from work to work; job costing is a very cooperative instrument for the minor business proprietors to estimate the separable work and also reduces expenses on the same developments in the upcoming period. To compute the total jab costing, it is essential to add direct material into direct labor and also add the applied overhead. In other words, the sum of direct material, direct labor, and applied overhead is the total of job costing.

What is Process Costing?

Process costing is the method of computing the rate of carrying out to several procedures, and the manufacturing of the process costing is identical. The operation of process costing is the charge is determining for the system first and then spread to the creating elements. The process costing calculation is depending on the process, and in the method of process costing, there is a substantial probability of a decrease in cost. The cost can transfer from one procedure to another in process costing.

In process costing, the products are continually producing in a large amount; that’s why they don’t have any identity. In process costing, the regular losses are carefully discovering, and the rare injuries are dividing. The process costing is appropriate for those industries where production is manufacturing in bulk; few examples are providing such industries, like the drinks industry, snakes industry, soaps industry, and many more. To keep the record of process costing is an efficient task. The work in the process is always present in the starting or the ending of the accounting period.

Five few steps are followed for the method of process costing; the First step is to consider the cost of inventory movement, the second step is to transform the working inventory to many comparable elements, the third step is to Calculate the all relevant or direct and indirect charges, the fourth step is to Estimate the total of per unit of completed and working inventory, the fifth and the last step is to share the cost of items of finished and in-process record.

Conclusion

The job costing and the process costing both are using in different industries, and they both are facing different methods as well. Job costing is requiring a high degree of supervision, but the process costing does not expect the same.