Job Costing refers to the pricing approach that is used to determine the cost of each job whereas Process costing refers to the paying approach used to establish the cost of each process.
Here are some of the main differences between them to help you understand how both differ:
Job Costing Vs Process Costing:
What is Job Costing?
The cost of each specified work is established through job costing.
It is the cost of specialized work or activities that are performed to meet the demands of the customer.
The task pricing technique is applied in the following situations:
Jobs are completed in accordance with the demands of the customer.
A task needs intensive treatment.
Each work session necessitates a separate task in progress.
What is Process Costing?
The cost of each process involved in the manufacturing of an item is calculated using a process costing.
When comparable things are manufactured in massive amounts, this technique is employed.
This is classified as sequential, selective, or parallel production.
For large-scale manufacturing, this approach is employed.
Examples:
Paper, steel, and other materials.
What is Difference between Job Costing and Process Costing?
The cost center in job is the work itself, whereas the cost center in process is the process itself.
So, what’s the difference? Let’s discuss the difference between them and how they are similar but not the same.
| Job Costing | Process Costing |
| The cost is computed depending on the work completed in accordance with the customer’s specifications. | The costs of various processes and operations are estimated. |
| Nature is customized manufacturing. | Nature in industrialized manufacturing. |
| Every job costing is determined. | The cost of the total process is assessed and then distributed across the manufacturing units. |
| The job is in the profit centre. | The procedure is being carried out in the profit centre. |
| There is no expense shift. | Costs might be transferred from one procedure to the next. |
| Each position is labelled differently. | Since items are created sequentially, there is no identity. |
| Cost estimation upon job completion. | Cost determination at the conclusion of the cost period |
| Suitable for items made to customer specifications. | Useful for businesses/industries that engage in mass production. |
| Typically, losses are not separated. Work-in-progress might exist or not. | In process costing, Losses are split in two as compared to job costing. |
| The value of labour is decreasing. | There is always work in process. |
| Less worth to labour. | More worth to labour. |
Conclusion:
Since Job Costing and Process Costing are employed in separate sectors, there are no comparability and differences between the two approaches.
One such distinction is that while each task needs a high level of monitoring and management, the process does not, as it is standardised.
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