Job Costing vs. Process Costing

November, 2013

Job costing and process costing are two different approaches to accumulating the costs that pertain to a firm’s products and services (Blocher, Stout, Juras, & Cokins, 2013). “Job costing . . . accumulates costs and assigns them to specific jobs, customers, projects, or contracts” (p. 99). By contrast, “Process costing . . . accumulates costs according to processes or departments and assigns them to a large number of nearly identical products” (p. 176).

Job Costing

According to Blocher et al. (2013), “A job costing system is appropriate when most costs incurred for the job can be readily identified with a specific product, batch of product, customer order, contract, or project” (p. 98). It is often associated with “large, unique or special-order items” (Winicur, 1993, p. 7). Oliver (2000) emphasizes that job costing is often used when goods or services are “produced or delivered in small quantities” (p. 156).

Job costing is commonly used in construction, printing, tax and financial services, advertising, and aircraft manufacturing (Winnicur, 1993; Oliver, 2000; Blocher et al., 2013). Companies located near the author that could be expected to use job costing include Liberty Press of Springfield and Noble Communications +. Liberty Press provides both offset and digital printing as well as graphic design services (Liberty Press Printing, 2012). Its orders are highly customized, making job costing a natural choice. In fact, vendors have developed job costing software tools for use in the printing industry (“In Brief,” 2005). Noble Communications + describes itself as “a full service advertising agency built to accommodate life’s most constant and evolving fields: Food, Shelter, and Services” (Noble Communications, 2012). Job costing would fit this firm inasmuch as its services are unique “editions” customized to individual clients.

Process Costing

According to Oliver (2000), process costing is suitable for a firm that produces similar items in mass quantities, with little evident distinction in the resources required for each product or service. Blocher et al. (2013) emphasize that process costing fits a context of “continuous mass production” (p. 98) and “a standardized production process to manufacture homogeneous products” (p. 176). Process costing is advantageous in cases where labor, materials, and overhead cannot easily be traced to specific products, and thus where their costs must be allocated first to inventory and then to the resulting products (Dosch & Wilson, 2010).

Process costing is common in manufacturing—chemicals, food processing, paper products, consumer packaged goods, and more—as well as service industries—such as bank and mail processing (Oliver, 2000; Dosch & Wilson, 2010; Blocher, Stout, Juras, & Cokins, 2013). Southwest Missouri companies that presumably use process costing include Springfield ReManufacturing Corporation (SRC) and Jack Henry & Associates. SRC remanufactures a variety of engines and other products in service to markets such as transportation, agriculture, construction, and mining (Springfield ReManufacturing Corporation, 2010). Jack Henry is known for the array of software and data services that it provides to the banking industry (Jack Henry & Associates, 2013). Both firms are good candidates for process costing in that they develop a range of similar products or services and offer them en masse to their respective markets.


How does a firm choose between job and process costing systems? According to Blocher et al. (2013), this “depends on the nature of the industry and the product or service, the firm’s strategy and management information needs, and the costs and benefits” (p. 97). Furthermore, it is worth observing that companies do not necessarily have to adopt a purist approach. Rather, according to Oliver (2000), “Most companies use hybrid systems that combine elements of both job order and process costing.”


Blocher, E. J., Stout, D. E., Juras, P. E., & Cokins, G. (2013). Cost management: A strategic emphasis (6th ed.). New York: McGraw-Hill/Irwin.

Dosch, J., & Wilson, J. (2010, August). Process costing and management accounting in today’s business environment. Strategic Finance, 92(2), 37–43. Retrieved from http://search

In brief. (2005, March 31). Printing World, 289(13), 38. Retrieved from

Jack Henry & Associates. (2013). Jack Henry & Associates at-a-glance. Retrieved from

Liberty Press Printing. (2012). Products & services. Retrieved from

Noble Communications. (2012). About. (2012). Retrieved from

Oliver, L. (2000). The cost management toolbox: A manager’s guide to controlling costs and boosting profits. New York: AMACOM. Retrieved from

Springfield ReManufacturing Corporation. (2010). Who we are. Retrieved from

Winicur, B. (1993, May). Job order costing. The National Public Accountant, 38(5), 7-8. Retrieved from

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