ECONOMICS

Detailed explanation-1: -So, we can conclude that the standard cost system is used in job order costing. And it is not applicable in process costing. Process costing is the method for calculating the cost of production as per the processes, individual costs cannot be estimated in process costing.

Detailed explanation-2: -Job order costing is used to value inventory when the product or service is made-to-order, and standard costing is used when products are identical to each other. Costs for raw materials, labor, and overhead are calculated and included in an item’s standard cost.

Detailed explanation-3: -Process costing and job order costing are both acceptable methods for tracking costs and production levels. Some companies use a single method, while some companies use both, which creates a hybrid costing system. The system a company uses depends on the nature of the product the company manufactures.

Detailed explanation-4: -Job costing is used for very small production runs, and process costing is used for large production runs.

Detailed explanation-5: -Standard costing is the practice of estimating the expense of a production process. It’s a branch of cost accounting that’s used by a manufacturer, for example, to plan their costs for the coming year on various expenses such as direct material, direct labor or overhead.