Application of Process and Job Costing System in a Company

Application of Process and Job Costing System in a Company
Application of Process and Job Costing System in a Company
Job costing system encompasses a detailed collection of manufacture expenses which are
attributable to specific production unit in a company. For instance, production of custom-
designed products like furniture and offering painting services requires utilization of job costing
system. The system needs producers to record the labor cost of furniture on an expense sheet.
Correspondingly, job-costing system requires that the expense of materials used in furniture
preparation and painting charged on the furniture and painting service (Maher, Stickney, & Weil,
2012). Therefore, job-costing system assists the producer to bill clients for the materials and
labor used in production process. Additionally, a company may use job-costing system to
identify profits associated with the production of specific furniture.
However, process costing entails expense accumulation for extensive production of
similar products. For instance, the creation of a large volume of gasoline requires a company to
record the amount of oil and labor cost used in refinery unit or facility in a corporation’s
expenses account. Consequently, an organization may utilize job-costing system when the
corporation produces unique products. Job costing system assists firms which produce unique
items to standardize their products. Additionally, when a company engages in the small-scale
production of products, the firm may utilize job-costing system. While large-scale production
requires an application of process costing system (IMA, 2012). Companies involved in massive
record keeping such as accounting corporations may use job-costing system because the firms
charge materials and time to a specific job (Garrison, Noreen, Brewer, & McGowan, 2010).
Moreover, a company may use job-costing system when the firm desires to bill customers
because it comprises comprehensive information pertaining project cost.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.
IMA, . (2012). Wiley CMA Learning System Exam Review 2013, Test Bank. Hoboken: Wiley.
Maher, M., Stickney, C. P., & Weil, R. L. (2012). Managerial accounting: An introduction to
concepts, methods and uses. Mason, OH: South-Western Cengage Learning.

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