Process costing is used for products that a re similar and produced

continuously

Similarities between job order and process costing

• both systems assign material, labor and overhead costs to products and
they provide a mechanism for computing unit products
• both systems use the same manufacturing accounts including
manufacturing overhead, raw materials, work in progress and finished
goods
• the flow of costs through the manufacturing accounts is basically the
same in both systems.

Differences between job order and process costing

• process costing is used when a single product is produced on a
continuing basis for a long period of time while job order is used when
many different jobs having different production requirements are worked
on each period.
• process costing systems accumulate costs by department while job
order costing systems accumulate costs by individual jobs
• process costing systems computer unit costs by department while job
costing systems compute costs by job on the job cost sheet

Equivalent units = number of partially completed units x percentage

completion
Equivalent unit of production = units completed and transferred + ending
WIP x percentage completion
UCT= started into production - ending WIP + beginning WIP
Equivalent unit of production = units completed and transferred (UCT) +
equivalent units remaining in work in process
Cost per equivalent unit = cost of beginning WIP inventory + cost added
during the period / equivalent units of production
Cost of ending WIP inventory = percentage completed x ending WIP
completed
Cost of ending WIP inventory material = cost of ending WIP inventory x
Cost per equivalent unit
Cost of unit completed and transferred = cost per equivalent unit x unit
completed and transferred (UTC)

To compute cost of unit transferred and the cost of work in process

inventory, find cost of ending WIP inventory , cost of ending WIP material
and cost of unit completed and transferred

Reconciliation report
Cost to be accounted for = cost of beginning WIP inventory + cost added
during the production period
Cost accounted for = cost of ending WIP inventory + cost of unit
transferred and completed