According to the Dictionary of Accounting Terms, process cost system is a method that aggregates manufacturing costs by departments or by production

processes. It defines job order cost as accumulation of costs by specific jobs, contracts, or orders. There are four main differences between a job order cost and a process cost system. One work in process account is used in a job order cost system and in a process cost system, there are multiple accounts used. Costs for a job order cost system are charged and summarized in a cost sheet. In a process cost system, the costs are summarized for each department onto a production cost report. Costs are figured when the job is done for a job order system, and for a process cost system, they are figured at the end of the period of time. The last difference between the two is the computations. The cost per job divided by the units that are produced equals the unit cost for job order cost system. For the process cost system, the total manufacturing costs for the period divided by the units produced during that period is the unit cost. Services industries like hospitals, law firms, accounting firms, and repair shops use a variation of the job order cost system to gather the costs for accounting and billing uses. Companies like Weyerhaeuser, Coca-Cola, and Oscar Meyer use a process cost system. These companies use a single product that can also be used to make many other products. A process cost system is basically like recycling.

Shim, J. K., Ph.D. & Siegel, J. G., Ph.D., CPA. (2010). Dictionary of Accounting Terms. Hauppauge, NY: Barrons Educational Series, Inc. Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2005). Managerial accounting: Tools for business decision making (3rd ed.). Hoboken, NJ: John Wiley & Sons.