Process Costing

A move damageing system is a cost system in which the cost of a production or service is obtained by assigning cost to masses of like or similar units. Unit be ar then calculated on an median(a) basis. Process cost systems be wasting diseased in industries that produce like or similar units which be often mass produced. In these industries, products are manufactured in a very similar way. The companies usually use the same amount of civilize materials, direct manufacturing labor costs and manufacturing overhead costs (CliffNotes Study Guide, 1999).Industries that use process costing systems are for example chemical processing, oil refining, pharmaceuticals, plastics, brick and cover manufacturing, semiconductor chips, beverages and breakfast cereals. The chisel piece cost systemis use when products are made based on specific customer orders. each product produced is considered a job. make ups are tracked by job. function rendered can also be considered a job. Service co mpanies consider the humans of a pecuniary plan by a certified financial planner, or of an estate plan by an attorney, unique jobs.The job order cost system must capture and track by job the costs of producing each job, which includes materials, labor, and overhead in a manufacturing environment (Willkommen, 2000). The passing between job costing and process costing is the extent of averaging use to compute unit costs of product and services. The cost object in job costing is a job that constitutes a distinctly placeable product or service. The quantity of manufacturing resources is different in any job. It would be incorrect to cost each job at the same average manufacturing cost.So, when like or similar units are mass produced, process costing averages manufacturing costs over all units produced (CliffNotes Study Guide, 1999). The costs of a product are important for inventory calculations, pricing decisions and product profitability analysis. Its also important for measuring how well the management is done and if costs are reduced effectively. A company I worked for used a hybrid system that used mostly a process costing system and veritable aspects of the job order cost system. The system skint down separate material costs, overhead and labor.The system was fairly unblemished and helped us maintain a healthy profit and adjust certain aspects of the business as needed. References Accounting Principles II Job Order Cost System . (1999). CliffsNotes Study Guides . Retrieved July 21, 2012, from http//www. cliffsnotes. com/study_guide/Job-Order-Cost-System. topicArticleId-21248,articleId-21222. html Process Costing Systems. (2000). Willkommen in Ralf KAnigs Netzbehausung. Retrieved July 21, 2012, from http//www. koenig-aalen. de/vorstellung/ bow/pcs. php