The type of product a company produces affects the type of accounting system needed to determine...

Question

The type of product a company produces affects the type of accounting system needed to determine product cost. The 2 most common types of costing systems are job-order costing and process costing.

Respond to the following in a minimum of 175 words:

Compare and contrast job-order and process costing systems. How can events in a job-order costing system affect financial statements? How can events in a process costing system affect financial statements? Provide specific examples for each type.

Khushboo · Accepted Answer

Analysis of two costing techniques: 
Job- order costing and process costing are completely different from each other. The first method is used when the goods are manufactured against specific orders whereas process costing is used when the goods are passed from different processes and the production flow remain continuous irrespective of period. Under first method jobs are allocated as cost center whereas under second method the processes are allocated as cost center (Lary Walther, 2021). There is transfer of outlays from one process to another in process cost whereas it does not happen in job cost.

The type of product a company produces affects the type of accounting system needed to determine product cost. The 2 most common types of costing systems are job-order costing and process costing....

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