What is a difference between the job-order costing system and the process costing system?
A)One does not use a raw materials account.
B)The number of work-in-process accounts is different.
C)One does not use the finished goods account.
D)They both distribute the costs among equivalent units.

Question

Quizplus · Accepted Answer

The job-order costing system tracks costs for unique, custom orders whereas the process costing system tracks costs for a large volume of identical products produced through a continuous process. This results in a difference in the number of work-in-process accounts. Job-order costing will have a work-in-process account for each unique job, while process costing will have a single work-in-process account for all products in the production process. Option A is incorrect because both systems use a raw materials account. Option C is incorrect as both systems use a finished goods account. Option D is incorrect because although both systems distribute costs among equivalent units, the method of calculation and the level of detail may differ.

What Is a Difference Between the Job-Order Costing System and the Process