Process costing

• is similar to job order costing in that they both are averaging techniques used to assign costs to output in manufacturing companies.

• differs from job order costing in that process cost¬ ing is used in companies making large quantities of homogeneous products; job order costing is used in companies making smaller quantities of distinctive, custom-ordered products.

• differs from job order costing in that process cost¬ ing uses either the weighted average or FIFO method to compute equivalent units of produc¬ tion; job order costing does not use either type of cost flow assumption and does not compute equivalent units of production.

LO.1