Costing:

The measurement of cost of a product or service is called costing; however, it is not a

recommended terminology.
Methods of cost accumulation
Process costing
It is a method of cost accounting applied to production carried out by a series of operational
stages or processes.
Process costing system applies when standardised goods are produced to a series of
interconnected operations.

Example:
In some industries, the output produced emerges from a continuous process. An example might
be an oil refinery; Oil in a raw state is input and subjected to a process of purification. Refined
oil emerges at the end of the process.
Job order costing:
Generally, it is the allocation of all time, material and expenses to an individual project or job.
Difference Between Job Costing and Process Costing
Characteristics Job Order Costing Process Costing
Application Where different products having peculiar Where single standard
specifications are produced against product is produced in
customers’ order. successive runs.
Production is for stock and in
anticipation of demand.
Accumulation In order to determine cost of each job, costs Costs are associated only with
of cost are compiled job wise. At the same time, to departments
evaluate efficiency of departmental
management cost are also compiled
department wise.
Cost Per Unit Unit cost is computed on completion of job. An average unit cost is
The job may itself be a single cost unit e.g. a computed at the end of
machine or it may be a multi unit costing period by dividing
total cost by units of output of
the period
Work In Only one work in process control account is A separate work in process
Process maintained control account is maintained
Account for each producing
department
Cost of More clerical efforts are needed to Cost accumulation is simple as
operating the accumulate costs by jobs and by costs are accumulated only by
system departments,- therefore, the system is more departments; therefore, the
expensive system is comparatively less
expensive.