Introduction to Job Costing and Process Costing Systems
Companies can utilize job (JCS) or process (PCS) costing systems when determining the costs of their products or services. Selecting a specific method depends on different factors, including strategy, a particular industry, and what is presented on the market (Blocher et al., 2022). Firms are likely to use JCS when incurred costs can be pinpointed with a product or its batch, an order, a project, or a contract.
Businesses may rely on PCS when delivering uniform offerings typically created in ongoing mass production (Blocher et al., 2022). Choosing the most appropriate method is essential for regulating other operations. The Bible preaches the significance of managing costs to secure success in other endeavors (King James Bible, Luke 14:28). JCS and PCS are practical for a company’s functioning but employed in distinct contexts and industries.
Characteristics of the Job Costing System
Specific Features of the Job Costing System
JCS is utilized in various businesses operating in diverse sectors. The approach can be characterized by its implementation in advertising, repair, healthcare, accounting, architecture, consulting, and other service industries (Blocher et al., 2022). It is meaningful to understand that while firms use JCS, they are likely to refer to the method in distinct ways specific to the environment of their operations. Medical facilities employ the term case, whereas advertising companies typically utilize the concept of a project (Blocher et al., 2022).
Examples of Audi and Hitachi
One example of a business relying on JCS is Audi since the corporation offers repair assistance, with the work varying depending on what needs to be fixed (Jasim et al., 2020). JCS is not exclusive to service industries and applies to firms offering certain products. For instance, Hitachi relies on JCS when assembling its specialized machines, which differ from its other creations (Jasim et al., 2020). JCS is associated with unique offerings, so those using the approach must be well informed about their operations, especially since one may be “destroyed for lack of knowledge” (King James Bible, Hosea 4:6). JSC is utilized when firms provide distinct services and products.
Characteristics of the Process Costing System
Specific Features of the Process Costing System
Corporations applying PCS have a different orientation than those using JCS. PCS’s primary characteristic is that it is widespread within businesses with standardized production of uniform offerings. In such contexts, costs are accumulated based on specific procedures or departments and are associated with many primarily equivalent products. Corporations that rely on PCS function in industries that focus on mining, bottling, canning, electronics, and other mass production sectors (Blocher et al., 2022).
Examples of Coca-Cola and Citibank
A noteworthy instance of a company utilizing PCS is Coca-Cola. The enterprise delivers large quantities of homogenous drinks and is involved in bottling operations (Nair et al., 2021). However, PCS has also been implemented by firms that provide services rather than products. For example, Citibank offers the same assistance to its customers when processing deposits (Jasim et al., 2020). Although PCS is associated with generating similar items in large quantities, it is significant to pay attention to details to avoid overlooking a potentially influential expense. As the Bible suggests, one should remain alert and clearheaded (King James Bible, 1 Thessalonians 5:6). Accordingly, PCS is used when a company provides many identical products or services.
Comparison and Application of Job Costing and Process Costing in Business
JCS and PCS are practical approaches but are utilized in distinct situations. While JCS can be applied by corporations like Audi to determine the expenditures of repair assistance, PCS can be implemented by enterprises like Coca-Cola to create its equivalent drinks. Therefore, firms should be mindful of their goals and operations when selecting a certain costing system to ensure that every expense is accounted for properly.
References
Blocher, E. J., Juras, P. E., & Smith, S. D. (2022). Cost management: A strategic emphasis (9th ed.). McGraw Hill.
Jasim, Y. A., Awqati, A. J., Hussen, R. A., & Lubis, N. I. (2020). Job costing: Empirical evidence of bakery production. Accumulated Journal: Accounting and Management Research, 2(2), 179-189. Web.
King James Bible. (n.d.). The King’s Bible. Web.
Nair, R. K., Reddy, L. S., Verma, P., Pandey, R., Yuwono, S., Sin, L. G., Qi, W. Y., Kee, D. M., Gee, O. X., Ing, T. W., & Yu, T. P. (2021). The impact of COVID 19 towards international business strategy: A study of Coca-Cola company. International Journal of Accounting & Finance in Asia Pacific, 4(2), 73-92. Web.