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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