In a process cost system,
the unit cost of a product or service is collected by assigning
a whole costs to a lot of specific or similar units of output. To explain, product costs are calculatedby dividing total costs paid by the number of units of output from the production
process. In a manufacturing process cost setting, every unit gets the same or
similar amounts of direct material costs, direct manufacturing labor costs, and indirect
manufacturing costs (manufacturing overhead).
![]() | |
| Process cost system |
The major difference between process cost system and job costing is the levels of averaging
used to calculate unit costs of service or product. In a job-costing system, individual jobs
using various quantities of production resources, so it may be incorrect to cost each job at
the same average production cost. On the flip side, when identical or similar units of products
or services are mass-produced, not processed as individual jobs, process cost system is used as a tool to
calculate the average production cost for all units produced. Some processes such as clothes
manufacturing have aspects of the two process cost system (cost per unit of each operation, like
as cutting or sewing, is identical) and job costing (different materials are used in several
batches of clothing, say, wool versus cotton).

0 comments:
Post a Comment