Posted: January 17th, 2023

job costing system and the process costing system

The job costing system and the process costing system are both popular costing systems used in companies all around the world. Job costing is when a certain product or service receives a cost amount then batched by the company’s chosen filing system (Blocher & Hicks, 2019). “Types of companies that use job costing include those in construction, printing, special equipment manufacturing, shipbuilding, custom furniture manufacturing, professional services, medical services, advertising agencies and others” (Blocher & Hicks, 2019). When a job costing system is set up correctly, it can save the company money and time (The Daily Reporter, 2017). The company that I currently work for uses this system. They are a construction company who builds custom residential home. Their process looks like this… our costing administrator ensures that all quantities and pricing is correct, then she sends out purchase orders to our vendors. The vendor will then perform their tasks and receive payment from the accounting department. Job costing systems are extremely common among this type of industry. (Moldof, 2014). Another company that uses Job Costing is Southern Printing. They are a local print shop in my community that I have used and my employer uses. Their process is when a request comes in, it is assigned a process number. The job is then performed and payment is requested by the customer at the time of pick-up. The process costing system is done when a good is mass produced and item numbers are assigned to batches of those goods that go through the process together and are almost identical (Blocher & Hicks, 2019). Companies that practice process costing are those that mass produce their products. An example of a company that practices this in my community is Gatorade. Gatorade has a large plant in my area that mass produces different flavors, sizes, and types of Gatorade products. The products are produced on an assembly line and assigned an identification number in batches depending on which kettle the liquid came from. They are then processed through the distribution department to be taken for sale. Another example of a process costing company is Federal Mogul. They manufacture car parts and clean air products. Federal Mogul is a large manufacturer that also produces their items in bulk and is then batched.

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