Manufacturing and Job Order Essay

Submitted By produce77
Words: 400
Pages: 2

In order for any company to be successful in today’s very competitive business market they must be able to determine what process works best for them. Whether to choose job costing or process costing a few questions must be answered. Before we dive into that decision making procedure let us look at the connection and differentiation between the two.
The manufacturing costs of each process are identical. Both systems deal with tracking how manufacturing costs to include direct materials, direct labor, and overhead flow through work in process to finished goods and finally when the goods are sold, to cost of goods sold (Schneider, 2012, Ch. 4, Sec. 1).
Customer service oriented businesses to include law firms and tax-preparing companies utilize job order costing. This enables them to manage each individual client. Each client in a sense is an individual job. Upon the closing of a business day, the job order cost sheets are tallied. This is a great tool to identify how much time is used for each client and bill him or her accordingly. Simply put it measures how much revenue is produced every day versus the costs associated with job activities.
Process costing and mass production are terms that go hand in hand. This procedure helps monitor monthly expenses in businesses manufacturing their respective product. It revolves around the costs associated with manufactured goods undertaken by different departments. A great example of this is a car manufacturer. Not to be confused with the high-end cars that are made specifically for an individual. It is run through an assembly line and each department contributes to the…