Initial question

What are the major differences between job-order costing and process costing systems? Give an example of a well-known company that might use job-order costing and an example of a well-known company that might use process costing. Explain why you have chosen the companies that you did, specifically why job order costing or process costing are used. Do not choose companies that your classmates have already commented upon. Participate in follow-up discussion by critiquing your classmates' choices of companies.

Please include proper citations in your discussion post. Points will be deducted if proper citations are not used.

Job costing refers to calculating the cost of a special contract, work order where work is performed as per client's or customer's instructions. Process costing refers to a costing method, in which the costs which are charged to various processes and operations is ascertained. The difference between the two is that Job costing is suitable for the industries which manufactures products as per customer's order and processing is perfect for the industry where mass production is done.

Manufacturing companies such as IBM, GM or Volkswagen groups incorporate job order costing as a means of controlling usage of raw materials, production equipment and labor hours. These businesses consider each customer order a separate job for the purposes of job order costing. Greenburg tells us that the factory floor for most manufacturing departments consist of the Cutting Department and the Finishing Department (Greenberg, R. K., & Schneider, A. (2010). Alternatively, manufacturers may group smaller value projects together under a single job heading but manufacturers group jobs depend on the size of the company. When it comes to process costing company such as Chevron Corporation use this process to produce mass batches of gasoline for their customers. Process costing as Steven asserts is the only reasonable approach to determining product costs in many industries (Bragg. Steven, (2018.). The reason I chose IBM, GM and Volkswagen is because they are the largest manufacturing companies in the world that operate in job order costing and I will speak the same for Chevron corporation when it comes to mass process costing. From a personal level I deal with some of the clients that deal with these company’s and I find their process when it comes to job- costing and process costing very interesting.

References

Greenberg, R. K., & Schneider, A. (2010). Job order costing: a simulation and vehicle for conceptual discussion. Academy Of Educational Leadership Journal, (3), 39.

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