Job Cost vs Process Cost System

Question 1

What is a Job Cost System used for?

Answer 1

Custom, unique, or specialized products/services.

Examples include construction, custom furniture making, and consulting firms.

Question 2

In which industries is a Job Cost System commonly found?

Answer 2

Construction, custom furniture making, consulting firms.

These industries typically deal with unique or specialized products.

Question 3

How are costs tracked in a Job Cost System?

Answer 3

Costs are assigned to specific jobs or projects.

This allows for precise tracking of expenses related to individual jobs.

Question 4

What document is used in a Job Cost System?

Answer 4

Job cost sheet.

This document details the costs associated with a specific job.

Question 5

How is Work in Progress (WIP) tracked in a Job Cost System?

Answer 5

Each job has its own WIP account.

This helps in monitoring the progress and costs associated with individual jobs.

Question 6

What is a Process Cost System used for?

Answer 6

Mass production of identical or homogeneous products.

This system is suited for industries that produce large quantities of the same product.

Question 7

In which industries is a Process Cost System commonly found?

Answer 7

Food processing, chemical manufacturing, oil refining.

These industries typically focus on producing uniform products in bulk.

Question 8

How are costs tracked in a Process Cost System?

Answer 8

Costs are assigned to each production process or department.

This allows for tracking costs across different stages of production.

Question 9

What document is used in a Process Cost System?

Answer 9

Production cost report.

This report summarizes the costs incurred during the production process.

Question 10

How is Work in Progress (WIP) tracked in a Process Cost System?

Answer 10

Costs are accumulated by process or department.

This approach helps in assessing the total costs associated with each production stage.