Bus 642 week 1 Essay

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Process costing is a costing system that is designed to allocate the manufacturing costs evenly to the products being produced (Schneider, 2012). It is used mainly by businesses that mass produce similar or identical products on a continual basis. An example of this would be a brick company. A brick company mass produces bricks that are identical in size, shape, and texture, so a process costing system would be the best choice for their business needs.
Job costing system allocates the manufacturing costs to individual products (Schneider, 2012). It is commonly used by businesses who want to know what manufacturing costs are associated with different jobs, products, or services. A good example of company that might use this type of costing system is a hospital. A hospital is generally broken into different departments and each department offers different services to its customers. For instance, the emergency department offers emergency services and the radiology department offers x-rays and ultrasounds to their customers. Therefore, because a hospital operates in this manner, they need to be able to correctly identify which costs are associated with each department.
As you can see, from the above definitions, each costing system is very unique and they both have some similar characteristics. For instance, both costing systems have the main goal of allocating the manufacturing costs to the products being produced and they also use the same manufacturing accounts for financial reporting
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