The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of products or services.

True

False

 

Answer: False

Step-by-step explanation

Because the job order cost system is computed per job, the cost of each job includes direct materials, direct labor, and manufacturing overhead. While the product is in production, the direct materials and direct labor costs are included in the work in process inventory. The direct materials are requested by the production department, and the direct material cost is directly attached to each individual job, as the materials are released from raw materials inventory. The cost of direct labor is recorded by the employees and assigned to each individual job. When the allocation base is known, usually when the product is completed, the overhead is allocated to the product on the basis of the predetermined overhead rate.