A major difference between job costing and process costing is the extent of ___________ used to calculate the unit costs of products or services.

Question

Quizplus · Accepted Answer

The correct answer is D) averaging.

In job costing, each unit (or job) is unique, and costs are accumulated and assigned to each individual job. Therefore, an accurate cost of each unit can be determined by simply dividing the total costs by the number of units produced.

In contrast, process costing is used when large quantities of identical products are produced. The costs incurred during the production process are accumulated and then divided by the total number of units produced to determine the unit cost. Since the costs are spread out evenly among all units produced, this is known as "averaging."

Therefore, the major difference between job costing and process costing is in the extent of averaging used to calculate the unit costs of products or services.

A Major Difference Between Job Costing and Process Costing Is