Normal losses of production units are losses which are expected from the inherent nature of the process. The most significant are explained below. There are a number of terms which need to be understood when discussing process accounting. All the costs relating to the manufacture are identified and allocated to the job and later used to invoice the customer. The main difference between process costing and job costing is that job costing is used when the costs can be allocated to a specific job, often identified with a particular customer.įor example, a customer might place an order for an item of furniture to be manufactured to their specifications. It should be noted that process costing and job costing are different methods of costing. Process costing can be applied to manufacturing and non-manufacturing operations.The manufacturing process might result in joint products (multiple products) or byproducts.The finished product units are identical.Inputs such as raw materials and labor cannot be matched to individual finished units.e.g the manufacture of a chemical might involve processes such as purification, cooling, etc. The production units from one process are used as the inputs for the next process.Production is continuous and separated into a number of processes.Process costing has a number of unique characteristics. The costing method is particularly useful in mass production manufacturing when the product goes through a number of sequential processes on a continuous basis. Process costing is a method of costing which allocates production costs to individual production stages (processes) used in the manufacture of a product.

Job costing accounting software