Cost Accounting Essay

Submitted By jordanweaver89
Words: 518
Pages: 3

Account Cost accounting is a method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible. As opposed to financial accounting (which considers money as the measure of economic pressure) cost accounting considers money as the economic factor of production. There are two methods of cost accounting, job costing and process costing, which have many differences and similarities. Job Costing basically refers to the costs that are encountered in the businesses related to manufacturing goods. Job Costing ledgers, where those costs are recorded, form an integral part of the final account statement of manufacturers. This type of costing involves recording the costs as per the specific jobs rather than a particular process. However, Process Costing refers to the methodology involved in calculating the costs that are incurred while performing a particular task or undertaking a specific process. This might involve the costs that are incurred either directly or indirectly.
Job Costing involves the costs of every individual unit of production. However, Process Costing involves the costs that are averaged for each production unit. According to the definition, Process Costing is a method that is applied to the manufacture business that is held together by many continuous or repetitive processes. Process Costing works efficiently for the industries that are known to produce a single type of product. Both of these terms signify the costs related to labor, material and overhead costs.
Process Costing helps to keep a tight reign over the monthly expenditures in a manufacturing business. As an example, Job Costing involves the costs that form salaries of labors working in a particular process where Process Costing involves the costs of the processed or manufactured goods undertaken by different departments.
One of the major differences between Job Costing and Process Costing is that the Job Costing can be carried out while a particular job is going on.