Job Order versus Process Costing

 Process costing
Have there been any recent developments or changes in this area?
Notes from class
Cost management systems enable managers to measure the costs of products, services, and customers. Job order and process costing are two of the most popular cost management systems used to cost products and services. Basically, both systems assign expenses to products and services in a different way.
Job Order versus Process Costing
These two cost management systems are used to allocate overhead and support costs to products (goods and services). A job order costing system estimates costs of products in organizations that produce several types of products. More specifically, a job order costing system estimates costs for different jobs required for customer orders that are unique and customized . During the production process, job costs, such as direct material, direct labor, and overhead, are traced to each job in a job cost sheet. Companies that use this system offer customized products. A home-building company is a good example since they build each home differently based on the specifications of the future homeowner.
Alternatively, a process costing system is utilized when all units produced are treated as one type of output. All products manufactured during the time period are homogeneous. For instance, bottled water, cement mix, and canned soda products would fall into this costing system category. The products that are created from the production batch are assigned a unit cost.
A process costing system can have multiple stages. This setup is common in industries such as chemicals, basic metals, and pharmaceuticals. When using a multistage process costing system, the first step is to assess costs for each stage of the process and then to assign costs to individual products.
We will focus this week on job-order costing and the process associated with calculating the total cost of a job.