PROCESSCOSTINGVSJOBCOSTING.edited1.docx

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PROCESS COSTING VS JOB ORDER COSTING

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PROCESS COSTING VS JOB ORDER COSTING

Job costing trails the prime costs to allocate direct material and direct labour to a distinct product. At the same time, process costing also trails prime costs to allocate direct material and direct labour to each manufacturing department (Argade, 2020). For instance, Ford Motor Company, listed in New York Stock exchange, also applies process and job costing. The company does not find it quite easy in merchandising as they must account for every material, labour, and other manufacturing cost used in making the product—for instance, the Ford Fiesta manufactured by Ford Motor company.
Therefore, Ford Motor Company uses a job- costing to ensure all revenues and costs for each model can be easily differentiated from other models produced by the same company and recorded. The costs are traced and divided by the number of units in each model to evaluate the cost per model (Pollard, 2018). Additionally, the predetermined overhead costs are applied in determining the overheads work in progress for each product.
Hence, I would also choose Job costing since the company produces different types of cars, which are differentiated into various models that meet the requirement of various customers. The system also used to assign cost customers who might want special s of customed vehicles. On the other hand, the company could also use process costing in manufacturing identical models (Vanderbeck, 2012). The costing system used depends on whether the company can trace the cost incurred in manufacturing a single product model. Hence, Ford Motor company can use job costing systems for t operations and process costing in assigning costs to special s from customers.

Reference

Pollard, W. B. (2018). An Active Learning Approach to Teaching Job-Order Costing. Management Accounting Quarterly, 19(4), 10-10. https://go.gale.com/ps/i.do?id=GALE%7CA567546847&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=15285359&p=AONE&sw=w

Vanderbeck, E. J. (2012). Principles of cost accounting. Cengage Learning. https://books.google.com/books?hl=en&lr=&id=JQkKAAAAQBAJ&oi=fnd&pg=PR5&dq=job+ +costing+and+process+ +costing+in+Ford+Motor+company+&ots=3rRjiPRskS&sig=RSSv178_Es6VOq0s79wvd6VnZX4

Argade, S. L. (2020). Difference between Job Costing and Process Costing. http://studymaterial.unipune.ac.in:8080/jspui/bitstream/123456789/5111/1/Difference_between_Job_Costing_and_Process_Costing.pdf