Question

LO 4.1How do job order costing and process costing differ with respect to recording direct materials and direct labor?

Answer 1

Answer:

Reference : Cost Accounting Planning & Control ( Matz Usry )

Explanation:

Job order Costing procedure keeps the costs of various jobs or contracts separate during their manufacture or construction. this method is applicable in work in factories, workshops, construction engineers , printers etc.

Direct Materials, Direct Labor  ( Job Order Costing). Direct Materials are assigned by means of job order numbers. The cost of each  order produced for a given customer or the cost each lot to be placed in stock is recorded on a summary sheet called Job Order Cost Sheet.

Process Costing procedures are often termed continuous or mass production cost procedures. Process costing involves average costing for a particular period in order to obtain departmental and cumulative unit costs.the cost of a completed unit is determined by dividing the total cost of a period by the total units produced during the period.

Direct Materials need not be priced individually rather the cost is determined at the end of the production period through inventory difference procedure i.e adding purchases to beginning inventory and then deducting ending inventory.

Labor Costs are identified by and charged to departments in process costing, eliminating the detailed clerical work of accumulating labor costs by jobs.