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Job Costing vs Process CostingBASICS

Manufacturing Cost Analysis 4

Importance Your company wants to make money!

Profit and price (and ultimately your salary) depend on how you manage manufacturing costs.

You will have to address costs and economics in presentations about your work

Manufacturing Cost Analysis 4

Overview

Non-Manufacturing Costs

Manufacturing Costs

* Applies to both Job Costing and Process Costing *

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Job Costing Definition: A method that calculates the manufacturing costs for a specific job. This is usually done for small batches of things or single units.

Manufacturing Cost Analysis 4

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Job Costing Definition: A method that calculates the manufacturing costs for a specific job. This is usually done for small batches of things or single units. Examples:

◦ Designing specific websites

Manufacturing Cost Analysis 4

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Job Costing Definition: A method that calculates the manufacturing costs for a specific job. This is usually done for small batches of things or single units. Examples:

◦ Designing specific websites◦ Building custom pianos

Manufacturing Cost Analysis 4

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Job Costing Definition: A method that calculates the manufacturing costs for a specific job. This is usually done for small batches of things or single units. Examples:

◦ Designing specific websites◦ Building custom pianos◦ Constructing houses

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Process Costing Definition: A method used in mass production that summarizes the total cost of production over a period of time and assigns that cost to all items produced during that period.

Manufacturing Cost Analysis 4

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Process Costing Definition: A method used in mass production that summarizes the total cost of production over a period of time and assigns that cost to all items produced during that period. Examples:

◦ Producing gasoline

Manufacturing Cost Analysis 4

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Process Costing Definition: A method used in mass production that summarizes the total cost of production over a period of time and assigns that cost to all items produced during that period. Examples:

◦ Producing gasoline◦ Forming water bottles

Manufacturing Cost Analysis 4

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Process Costing Definition: A method used in mass production that summarizes the total cost of production over a period of time and assigns that cost to all items produced during that period. Examples:

◦ Producing gasoline◦ Forming water bottles◦ Making cereal

Manufacturing Cost Analysis 4

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Process Costing Definition: A method used in mass production that summarizes the total cost of production over a period of time and assigns that cost to all items produced during that period. Examples:

◦ Producing gasoline◦ Forming water bottles◦ Making cereal◦ Sewing clothing

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Homework Problem (MC4) Describe how you would use Job Costing in a Manufacturing Cost Analysis for a company that builds houses.

Describe how you would use Process Costing in a Manufacturing Cost Analysis for a company that produces screwdrivers.

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Sources Job Costing:

◦ http://www.accountingtools.com/job-costing

Process Costing:◦ www.accountingtools.com/overview-process-costing

Images:◦ http://www.freeimages.com

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