Job Costing System and Process Costing System

This article discusses job costing system and process costing system, their differences, and examples of organizations using them. Job costing system is used for unique products and involves detailed accumulation of costs. Process costing system is used for identical or similar units of products and involves cost accumulation for long-term productions. Examples of organizations using these systems are Lockheed Martin, Deollite & Touche, Pittsburgh Paints, and Chevron Corporation.

Running head: JOB COSTING SYSTEM AND PROCESS COSTING SYSTEM
Job Costing System and Process Costing System
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1JOB COSTING SYSTEM AND PROCESS COSTING SYSTEM
Discussion on job costing system and process costing system:
It is vital for organizations to select proper kind of costing system for their industry and
product type (Blocher et al., 2016). The active system of job costing is utilized by organizations that
develop different situations and products. On the other hand, process costing has included cost
accumulation for long-term productions.
Job costing:
Job costing demotes the essential and in-depth accumulation of different cost of productions.
These are attributable to particular groups or units. For instance, in this case, the construction of the
custom-designed furniture piece is a good example. This is accounted for job costing system. In this
case, different labor costs working on specific items of furniture are recorded over time sheet. Then
it is compiled over a cost sheet illustrating that specific job. In the same way, wood and other parts
in furniture construction are included and is linked to that specific piece of furniture.
Moreover, the data is used for billing customers for materials usage and different activities to
be done. This is to track the extent of profits of companies on various production jobs. These are
associated with particular items of that furniture (Hitomi, 2017).
Lockheed Martin:
To understand the case, Lockheed Martin, engaged in advanced technology systems can be
taken as a good example. There are specific characteristics of every system. Regarding product
uniqueness, this technology is utilized for unique products. As far as the overall size of the job is
considered, it is being used for various small runs of productions. Here, much more record keeping
is needed for job costing (Kavanagh & Johnson, 2017).

2JOB COSTING SYSTEM AND PROCESS COSTING SYSTEM
Deollite & Touche:
Deollite & Touche has been involved in accounting. Hence job costing is more likely used
for the intention of billing to customers. This is because it has been found to be detailing the proper
costs. These are consumed through various projects that are commissioned by customers. The job
costs recordings serve as the documentation or subsidiary ledger. This is regarding the overall
expenses of work-in-process inventory. Besides, it has also included expenses of goods sold and
goods inventory.
Process costing:
This includes products that have been indistinguishable from others. Besides, producing
10,000 gallons of gasoline needs the entire oil to be used in this process. This includes every labor in
refinery facility (Sayles, 2017). This is accumulated to cost account. Then it is divided by the
number of units generated to reach the unit cost. Apart from this, the costs are collected at a
departmental level.
Pittsburgh Paints:
For instance, Pittsburgh Paints, involved in painting sectors can be considered in this case.
Also, the processing system is deployed for engaging in developing different identical or similar
units of products. These are done in batches that have employed a consistent method.
Chevron Corporation:
This organization has been producing petroleum products. Additionally, process costing is
found to be utilized for various types of standardized products. Besides, it is also helpful for the
massive cost of productions. It also aggregates costs. Hence, it needs a lesser number of record

3JOB COSTING SYSTEM AND PROCESS COSTING SYSTEM
keeping. The steps involve summarizing of an overall flow of physical units of outcomes, computing
outputs as per equivalent units, assimilating overall costs accounted for and computing equivalent
unit costs (Chang, 2016).

4JOB COSTING SYSTEM AND PROCESS COSTING SYSTEM
References:
Blocher,, E., Stout, D., jURAS, P. & Cockins, G. (2016). Cost management: A strategic emphasis.
(7th ed.). Boston, MA: McGraw-Hill.
Chang, J. F. (2016). Business process management systems: strategy and implementation. Auerbach
Publications.
Hitomi, K. (2017). Manufacturing Systems Engineering: A Unified Approach to Manufacturing
Technology, Production Management and Industrial Economics. Routledge.
Kavanagh, M. J., & Johnson, R. D. (Eds.). (2017). Human resource information systems: Basics,
applications, and future directions. Sage Publications.
Sayles, L. R. (2017). Managing large systems: Organizations for the future. Routledge.