Question

Distinguish between process costing and job costing on the basis of cost computation.

Hint:

Process costing = standardised; Job costing = customised.

Answer 1

Process costing and job costing are two major methods of costing used for different types of production.
In process costing, costs are accumulated for each process or department for a given period.
Total cost is divided by the number of units produced to arrive at an average cost per unit.
This is suitable for continuous, mass production where identical units are produced.
In job costing, costs are recorded separately for each specific job or order.
Each job is treated as a unique unit, and all costs — materials, labour, and overheads — are traced and allocated to that job alone.
This is used for custom orders or projects where work varies from job to job.
Therefore, the main distinction is that process costing uses average cost per unit, while job costing determines the exact cost for each job.