Accounting › Section R · Job order and process costing › Topic R.1
Job order versus process costing
Every manufacturer must work out what each product costs, both to set prices and to value its inventory. How it does that depends on what it makes: one-of-a-kind jobs call for job order costing, and streams of identical units call for process costing.
In this topic
- Why product costs matter
- Job order costing
- Process costing
- Prime and conversion costs
- The two systems side by side
- Worked example: choosing a system
- Worked example: a unit cost each way
- Hybrid systems and the cost of detail
- Service businesses use both too
- Common mistakes to avoid
- Key takeaways
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