Job-Order Costing vs Process Costing

The video tutorial explains two main costing methods: job order costing and process costing. Job order costing is used for large, unique, and customizable items, where costs are accumulated by specific jobs. Process costing is used for mass-produced identical items, where costs are accumulated by processes. The tutorial details how direct and indirect materials and labor are applied in both methods, and how manufacturing overhead is estimated and allocated.

What type of products is job order costing most suitable for?

• Products with high volume and low variety

• Mass-produced, identical products

• Standardized services

• Distinct, custom products

In job order costing, what is typically used to track individual job costs?

• Job cost sheet

• General ledger

• Balance sheet

• Income statement

Which costing method is best for homogeneous products?

• Standard costing

• Activity-based costing

• Job order costing

• Process costing

What is a challenge associated with process costing?

• Tracking costs for custom products

• Assigning costs to individual jobs

• Managing diverse product lines

• Identifying costs per unit of inventory

In process costing, what complicates the assignment of costs?

• The need for custom job sheets

• The presence of work in progress and completed inventory

• The requirement for detailed customer billing

• The use of unique materials for each product