What are Job-order costing and Process Costing? (Definition)

Job-order costing and process costing are the methods of costing. Here are the definition and types of both costing methods...

Job-order costing

The job-order costing method is used to assign direct costs to the specific order, contract, and also to a specific batch of production. Each job or order is specific and absorbs different operations which need costs both direct and overheads. Under this method, each job should be separated to ascertain the cost of each job. The job costing method is used in many specific works like printing, engineering, construction, etc.
Some important types of Job- order costing are:

Batch costing
Contract costing
Multiple costing

Process costing

Process costing is used in industries where a continuous process of production is carried out and the product is uniform. In other words, process costing is used in industries where certain steps are to be completed to convert raw materials into finished products. In this processing method, the cost of each process or step of production is determined for a given period of time. Process costing is used in many industries like sugar, chemicals, soap, oil, etc.
Some of the important types of Process costing are:

Single Costing
Operation Costing
Service Costing

I hope you get to know about methods of costing which are Job-order and process costing.

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