COMMERCE 2AB3 Study Guide - Profit Maximization, Earnings Before Interest And Taxes, Financial Statement

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Aadil Merali Juma

Document Summary

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry. 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. The averaging process is used to calculate unit costs in process costing. Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process. Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials. Estimating the degree of completion is easier for the calculation of direct materials since direct materials can be measured more easily than conversion costs. Process costing would be most likely used by a firm that produces heterogeneous products. Process costing would be most likely used by a firm that produces homogeneous products.