Job-Costing Systems Tend to Produce More Accurate Product Cost Information

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The Answer is There is more tracing of costs (such as direct materials and direct labour)to individual jobs in job-order costing systems than in processing costing systems.In process costing systems,costs are not traced to products/jobs; instead they are traced to activities or processes or departments before their allocation to outputs.In essence,all costs are indirect in process costing systems and have to be allocated.Usually,the allocation bases (including overhead allocations in job-order costing systems)are not entirely accurate.They are,in many cases,selected arbitrarily without establishing a cause-and-effect relationship.
Of course,more tracing generally costs more money even in this age of technology.This is the reason why job-order costing systems tend to be more expensive than process costing systems.Hybrid systems that are part-job and part-process are become popular because they offer the benefits of both systems,that is,greater accuracy and cost-efficiency.

Job-Costing Systems Tend to Produce More Accurate Product Cost Information

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