Job order and process costing systems differ in that job order costing

• is used in companies that make limited quanti¬ ties of customer-specified products or perform customer-specific services; process costing is used in companies that make mass quantities of ho¬ mogeneous output on a continuous flow basis.

• requires the use of a job order cost sheet to track the direct material, direct labor, and actual or ap¬ plied overhead to each customer-specific job; process costing simply accounts for direct mate¬ rials, direct labor, and actual or applied overhead by batch of goods per department.

• does not allow for the computation of a cost per unit unless all units within the job are similar in nature; process costing can and does create a cost per unit for each cost element.

• may use either an actual cost system (combining actual direct material, direct labor, and overhead), a normal cost system (combining actual direct material and direct labor, as well as applied over¬ head using a predetermined overhead rate), or a standard cost system (combining budgeted norms for direct material, direct labor, and overhead); process costing may use the same type of cost valuation systems but standard cost systems are significantly more prevalent in process costing than job order costing.

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