A comparison of the basic principles of process costing with those of job costing, given below, will assist in appreciating process costing procedures.
| Job Costing | Process Costing |
| 1. Production is by specify orders | 1. Production is in continuous flow, the products being homogeneous. |
| 2. Costs are determined by jobs or batches of products | 2. Cost are compiled on time basis, i.e. for production for a given accounting period, for each process or departments. |
| 3. The various jobs are separate and independent of each other. | 3. Being manufactured in a continuous flow, products lose their individual entity. |
| 4. Unit cost of a job is calculated by dividing the total cost incurred into the units produced in the lot or batch. | 4. The unit cost of a process, which is computed by dividing the total cost for the period (after adjustment of the opening and closing work-in-process), is an average cost for the period. |
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