Difference between production account and

cost sheet
Production account

Cost sheet

It is based on double entry system It is not based on double entry

of book keeping and prepared as an system
but
presented
in
a
account.
statement form.
It consists of 2 parts. The 1st part of
the account shows the total
production cost. The second part
gives the details of cost of sales and
profit for the period.

In this the elements of costs are

classified and presented in a
manner to give details of prime
cost, work cost, cost of production,
cost of good sold, cost of sales and
profit.

It shows the cost in aggregated and It shows the cost in a detailed and
thus facilitates comparison with analytical manner which facilitates
other financial account.
comparison of cost for the purpose
of control.
It is not useful for preparing tenders The estimated cost sheet can be
and quotations
prepared which can be taken as
basis for preparing tenders and
quotations.
It is based on actual figures.

Actual and estimated both.

Job Costing
Job costing is also known as job order
costing.
It is that form of specific order
costing which applies where the work
is undertaken as per the customers
specific requirements and each order
is of comparatively short duration.

Applicability
Job costing is applicable to concerns engaged in joborder production or services.
It is employed by jobbing concerns.
This method of costing is used in organizations, where
Production is done on the basis of customers
own specifications,
Products are manufactured in distinguishable lots,
Products are not uniform, and
It is practical to maintain a separate record of each
lot from the time the production has begun until it is
completed.
E.g. Printing, shipping, hardware, software, heavy
machinery, interior decoration, repairs and other
similar work.

Features
Work is performed in accordance
with the customers orders and
specifications.
Products are not produced for
maintaining stock.
Every job can be identified clearly.
Every job is charged with its own
cost.
Work-in-progress depends upon the
number of jobs in hand at the end of

Procedures Involved
Production Order
Assembly type order
Components production type

Material Costs
Labour Costs
Manufacturing and other Overheads
Completion of Jobs

Advantages
It helps in fixing up the responsibility for
inefficiency.
It determines the trends in costs.
It also determines the completion cost of each job.
It supports the preparation of estimates of costs of
jobs before production.
It enables comparison of estimated costs with the
actual costs.
It makes available to the management the
complete details of production orders which
contain valuable statistics on cost.

Limitations
Job costing involves a lot of clerical work in identifying
materials, labour, and overheads that relate to a
specific job or department.
They are not of much utility to the management, since
the costs are ascertained and compiled historically.
It does not support to establish budgetary control
system.
Job costs, over a specific period of time, cannot be
compared if major economic and technological
changes take place in between.
It is expensive to operate due to increased clerical
work.

Batch Costing
The Terminology of CIMA defines batch cost
as aggregated costs relative to a cost unit
which consists of a group of similar articles
which maintains its identity throughout one
or more stages of production.
In batch costing, the cost unit is not a single
product but some specific quantity of
similar products at the same time.
E.g. Pharmaceutical companies, readymade
garments, electrical tools and machinery
spareparts.

Features
Costs are collected batch-wise
Products of identical nature
Convenient group

Difference Between Job and Batch

costing
Job costing

Batch costing

Each job work is undertaken to It applies where similar article are

customers special requirements.
manufactured in batches for sale
or for use within undertakings.
The time taken for execution of The process time for each article
each job is of short duration.
in a batch is less than generally
taken for execution of a job.
Each job is treated as a cost unit A batch is a group of similar
which consists of a single order or product and it is treated as a
a contract
single cost unit.
Each job has a distinct number Each batch has a distinct number
and costs are collected against and costs relating to the batch of
the same number
units accumulated.