Piamonte, Joice F.

BSA -II
ACTIVITY
JOB ORDER PROCESS STANDARD
BASED
COSTING COSTING COSTING
COSTING

Standard costing
Activity based is the practice of
Process costing is
costing is a substituting an
an accounting
method of expected cost for
Job order costing methodology that
assigning an actual cost in
is a costing traces and
overhead and the accounting
method which is accumulates
DEFINITION indirect costs— rently, variances
used to determine direct costs, and
such as salaries are recorded to
the cost of allocates indirect
and utilities o show the
manufacturing costs of a
products and difference
each product. manufacturing
services between the
process.
expected and
actual costs.

Gives managers
more accurate
It helps the
It’s an easier production costs.
company make Helps
system to use This can help
estimates about manufacturers fix
when costing business make
the value of the prices of the
homogenous more informed
ADVANTAGES materials, labor, end products even
products decisions about
and overhead that before
compared to other which products to
will be spent while manufacturing is
cost allocation produce or help
doing that complete
methods. them find cheaper
particular job.
methods of
production.

Is a costing
system in which The
each product or disadvantages
Tracking all costs It is possible to
job has traceable using standard
as a production allocate all
costs. Process costs are
cost, including overhead costs to
costing is a controversial
DISADVANTAGE non-production specific activities.
costing system in materiality limits
S costs such as The choice of both
which a product for variances, non-
overhead, inflates activities and cost
mass produced, reporting of
the production driver might be
so costs are certain variances
price. inappropriate.
determined by and low morale for
equivalent units some workers.
produced.
DIFFERENCES

One of the key differences between

Job order costing is a costing system in
which each product or job has
traceable costs. Process costing is a
costing system in which a product
mass produced, so costs are
determined by equivalent units
produced.
Standard costing and ABC is the
method of overhead cost allocation.
Standard costing allocates the
overheads based on direct labor usage
for each unit that is produced. On the
contrary, overhead cost allocation in
the ABC system is based on level and
resource usage of each activity.

The similarities between job order cost

Both methods estimate overhead costs
systems are the product costs of
related to production and then assign
SIMILARITIES materials, labor, and overhead, which
these costs to products based on a
are used determine the cost per unit,
cost-driver rate
and inventory values

Cost of materials,
Product costs are wages and
The cost pool total
signed directly to overhead A predetermined
divided by cost
the products or expenses are estimated unit
PRINCIPLES driver, which
jobs as they are collected for each cost of a product
yields the cost
produced or process or or service.
driver rate.
completed. operation in a
period.