Job Order Costing (a Cost Accumulation Method) Homework Help

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Job order costing is subdivision of costing. If you are a student of Finance it is very important for you to learn the topic. Job order costing is method of cost calculation which is used in many companies. Even though it may seem difficult to approach the topic it is not difficult.

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Jon order costing is system of evaluating cost for a construction job. Job order costing is one of the main two types of cost accounting systems. The other type of cost accounting is process costing. Many organizations use both these two types of costing systems. These organizations include legal firms, book publishing houses, production houses, architectural firms, manufacturing companies of airplanes and ships etc.

Steps of Job Order Costing:

The whole system involves these following steps:

  • Identifying the job
  • Discovering direct costs to the job
  • Finding the indirect costs
  • Applying the indirect costs to the job
  • Evaluating the total cost
  • Closing the under or over applied manufacturing overheads.
  • Calculation of revenue and profit

Benefits of Job Order Costing:

Job order provides several benefits. Let’s take a look at them.

  • Job order costing provides detailed assessment of different cost components.
  • It analyses the profitability of a job.
  • It identifies the defects.

Difference between Job Order Costing and Process Costing:

  • In case of process costing, the products are homogeneous. Job order costing system calculates costs of different types of products.
  • Process costing is performed where the standardized products are produced and job order costing is used at the time of the production of specific products.
  • In process costing, no special treatment of products is required. On the other hand, for each product job order costing is needed.
  • The chance of cost reduction is high in process costing and in case of job order costing the possibility of cost reduction is less. Get more information from job order costing (A Cost Accumulation Method) assignment help

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