What is Process costing? Advantages & Disadvantages of process costing

What is  Process costing?Advantages & Disadvantages of process costing

Process costing

Concept and process costing

Concept and meaning of process costing

Process is a set of sequential steps followed to complete a certain activity. The way of maintaining the costing records of each process is called costing. It refers to the method of cost accounting under which cost are accumulated for every process which are interrelated to each other. Process costing is used in manufacturing concerns where the raw materials are converted to finished goods after passing through a number of processes. For example; in case of cotton textiles, the first process may be spinning, second process may be weaving and the final process may be finished.

Characters institute of management accountants (CIMA), London defines "process costing is that form of operating costing where standardized goods are produced."

Likewise, according to Charles T. Hangmen, "process costing deals with the mass production of like units that usually pass in continuous fashion through a series of production steps called operation of process."

Process costing is mostly used in manufacturing concerns. T determines the cost of a product at each stage of manufacturing or process. This method of costing is adopted by industries involved in the manufacturing of textiles, biscuits, cement, paper, oil refining, etc. the output of first process becomes the input of the second process and so on as shown in following figure.

Features of process costing

The major features of process costing are as follows:

a. Each process is treated as a cost center and the costs like material, labour and overhead are incurred in each process separately.

b. Production is in continuous flow and the output of one process becomes the input of sub sequences process and so until the finished production is obtained.

c. The costs also flow with the production process i.e. costs incurred in one process is transferred to the next process along with output.

d. Costs are ascertained for each process at the end of costing period.

e. Units of production are uniform and homogenous. As a result, unit cost of each process is obtained by averaging the total cost in each process.

f. Total cost of the process Is adjusted with normal loss, abnormal loss, abnormal gain and scrap of the process.

g. The output from each process may be categorized as main production and by products. The main product generally involves high cost whereas the byproducts involved low cost.

Advantages of process costing

The following are the advantages of process costing:

a. It is simple and less expensive to find out the cost of each process.

b. It is easy to allocate the expense to process in order to have accurate costs.

c. Production activity in process costing is standardized. Hence, managerial control and supervision become easier.

d. In process costing, the products are homogeneous. As a result, costs per unit can be easily computed by averaging the total cost and price quotations become easier.

e. It is possible to determine process costs periodically at short integrals.

Disadvantages of process costing

The following are the disadvantages of process costing:

a. The cost obtained at the end of the accounting period is historical in nature and is of little use for effective's managerial control.

b. Since process cost is average cost, it may not be accurate for analysis, evaluation and control the performance of various departments.

c. Once an error is committed in one process, it is carried to the subsequent processes.

d. Process costing does not evaluate the efficiency of individual workers or supervisor.

e. The computation of average cost is difficult in those cases where more than one type of product is manufactured.

Differences between job costing and process costing

The differences between job costing and process costing are as follow:

Elements of production cost

The following are the main elements of productions cost in process costing:

a. Direct materials: materials are used for manufacturing products. The materials required for production are issued to the first process. The output of first process is passed to the next process and so on. Hence, the output of first process becomes the input of second process and so on, sometimes; new materials may be introduced in the second and subsequent processes.

b. Direct labour: payment madden to the manpower involved in process work against their work is called labour cost. Generally, employees are engaged in one process and wages paid to them is debited in the concerned process account. But if the employs are engaged in more than one process, the total wages paid to them are apportioned among the process on equitable basis.

c. Direct expenses: cost of electricity, hire charges of machine, depreciation of machine are the cost that are directly attributable to a particular process. The process account is debited by such direct costs.

d. Production overhead: the overhead covers a significant portion of the total process cost. Great attention should be paid to ensure that each process is charged with a reasonable share of production overhead like store service, cafeteria services, services etc. are allocated on the basis of absorption rate. The overheads are debited to the process account.

Accounting for process costing

Process accounts
Under process costing, a separate account is maintained for each process. The account is debited with the value of materials, labour, direct expenses and overhead relating to the process. The value of by-products and scrap, if any, is credited to this account. The balance of this account, representing the cost of partially worked out product, is passed on to the next process and so on until the product is completed. Thus the finished product of one process becomes the raw material of the next process.
The following situations arise while preparing process accounts.
a. Process costing having no process loss and stock
All the costs like materials, direct, labour expenses and production overhead relating to the particular process are debited to the process accounts. Since there is no process loss, the output of a process is equal to the unit of input introduced in the process. The total cost of the process is transferred to the next process. The format of the process account having no process loss and stock is given below:

b. Process costing having process loss
It is rare that the output of a process is equal to its input. In most of the cases, the output of a process is less than the input. The difference between the input and output and output is called process loss. The process loss may be in the form of loss in weight, scrapes or wastes. These process losses may be classified into.
Normal loss
Normal loss or uncontrollable loss means the less of materials, which is inherent in the processing operations or in the nature of material. Normal loss includes loss of leakage and normal scrap. Normal loss is considered to be an integral part of process cost. It is unavoidable but efficient workers can reduce it to some extent. The accounting treatment of normal loss is as follows:
Abnormal loss
Any loss caused by unexpected or abnormal condition such as accident, carelessness, etc. is called abnormal loss. It is the excess of over the normal loss. For example, if 1,000 units of raw material are introduced in a process subject to wastage of 10 percent, i.e. the output of the process should be 900 units. But the actual output is 830 units; the extra losses of 70 units are abnormal loss. In other words, the excess loss of 70 units over the normal loss of 100 units is the abnormal loss.
Calculation of the unit and of abnormal loss:
Normal output/yield= inputs – normal loss/ scrap unit
Total normal cost = total cost of input – scrap value of normal loss
Abnormal loss unit = normal output unit – actual output unit
Normal cost per unit = total normal cost/ normal yield

Difference between normal loss and abnormal loss

The differences between the normal loss and abnormal loss are given below:

c. Process costing having abnormal gain

We know that margin allowed for normal loss is just an estimate and slight differences are bound to occur between the actual and anticipated output of a process. These differences do not always represent increased loss may be less than the expected. Thus, when actual loss in a increased   loss, on occasions the actual loss may be less than the expected. Thus, when actual loss in a increased   loss, in a process is lower than the expected, an abnormal gain results. The value of the gain is calculated in a similar manner to an abnormal loss.

Abnormal gain being the result of actual loss being less than the normal, the scrap realization shown against normal loss gets reduced by the scrap value of abnormal gain. Consequently, there is an apartment loss by way of reduction in the scrap realization attributable to abnormal gain. The loss is set off against abnormal gain by debiting this account. The balance of this account becomes abnormal gain and is transferred to costing profit and loss account. The balance of this account becomes abnormal gain normal yield or actual loss is less than normal loss.

Calculation of abnormal gain unit and value

Total normal cost= total cost of input – scrap value of normal loss

Normal output/ yield= input – normal loss/ scrap unit

Normal cost per unit = total normal cost/ normal yield

Sales account and income statement

Income statement is prepared to find out profit and loss. Income statement is based on sales account, if sales is recorded in related process account. Incomes statement is also prepared on the basis of profit and loss of every process. If sales are not recorded in related procuress account, incomes statement is prepared on the basis of total sales. Incomes statement can be prepared as follows:

a. When sales  is included in the process account

Interest process profit

The profit associated with the transfer of goods form one process to another is called inter process profit. Normally finished goods of one process are transferred to the immediate next process at cost of production basis. In some process industries, transfer of finished goods is made to the immediate next process by including some account of profit. The procedure is followed to demonstrate the department efficiency of concerned processes. It helps in recognizing the profit on each process of production. The profit so incorporated is called inter-process profit. The price fixed by adding nominal balance sheet for the transfer of the finished goods to the next process is called as transfer price. For balance sheet purpose, intern process profit cannot be included in stock, as a firm cannot make profit by trading itself. To avoid these   complications a provision must be created to reduce the stock to actual cost price. This problem arises only in respect of stock on hand at the end of the period.

The following are the objectives of inter process profit.

• To assess the performance of process operation

• To assess whether the output can compete with the market.

• To decide whether the output can be sold without further processing.

Advantages of inters-process profit

• It shows whether the cost of production computers with the market price.

• By comparing the transfer prices with the corresponding market prices, the 'week' or strong' sports in the manufacturing activity can be located. As a result, measures can be adopted to improve the conditions wherever necessary.

• It makes each process stand on its own efficiency and economics.

Disadvantages of inter-process profit

• This system involves an unnecessary complication of the accounts.

• This systems shown unrealized profits in respect of unsold stocks on the closing date of the accounting period.

• In the balance sheet, stock is conventionally shown at 'cost or market price whichever is lower' to make it acceptable to auditors and tax authorities. Thus, the profit included in stocks has to be eliminated from the stock value before they are shown in final accounts and balance sheet.

Wastage, scrap, spoilage and diffractive unit

1. What is the meaning and features of process costing?

The activities related to each other are known as process. In order to produce sugar, oil, shoes and soap and chemical substances and drinks different stages should be passed. Recording cost in different stages is known as process costing. Recording cost in different stages is known as process costing. The main features of process costing are as follows:

a. The product and process are standardized.

b. Unit of production is uniform and homogeneous. As a result, there is confirmation in the production.

c. Products are produced for stocks. They are not produced according to the demand of customers.

d. The output of one process becomes the input of next process. Cost of production is determined in average value.

2. What is scrap? How is it treated?

Scrap is defined as the incidental material residue. For a certain types of manufacturing, it has got some disposal values which are usually small. This type of loss is visible. Scrap may occur because of faulty operation, bad supervision, wrong tool setting and defective process. Scrap is recorded in the credit side of process account and debit side of profit and loss account.

3. What is wastage and how is it treated?

Wastage is defined as the portion of material which is lost during the production which has no reuse value. It is a complete loss. It may be visible or non-visible. Raw dust if furniture industry, as in a coke industry, send in construction, and evaporation in oil refinery etc. are the example of wastages. Normal wastage is not recorded in a separate account rather per unit cost of production increase due to this. But abnormal wastage is recorded in the credit side of process account and wastage is recorded in the credit side of process account and debit side of profit and loss account.

4. What is spoilage? How is it treated?

Spoilage is defined as the demand goods in the course of manufacturing process which are taken out of process and disposed off in some manner without further processing. This occurs due to some defects in material, fault in operation, defective machines and faulty tool setting. Normal spoilage is recorded in cost of production but abnormal spoilage is recorded in the debit side of profit and loss account.

5. What is defective production? How is it treated?

Defective products are defined as the imperfect products which are not up to the standard quality or do not meet prescribed specification. It can be rectified and turned into normal units by the application of extra material, labour and overhead. It is recorded in related department which is raised due to normal cases or detrimental activities. When it can't be separate, it is recorded in total overhead costs.

6. Write about the efferent type of process losses and explain their accounting treatments.

Normal loss: normal loss or uncontrollable loss means the loss of materials, which is inherent in the processing operation or in the loss nature of material. Normal loss including loss of weight leakage and normal scrap. Normal loss is considered to be an internal part of a process cost. It is unavoidable but efficient workers can reduce it to some extent.

Abnormal loss: any loss caused by unexpected or normal condition such as accidents carelessness, etc. is called abnormal loss. It is the excess of loss over the normal loss.

Abnormal gain: we know that margin allowed for normal loss is just an estimate and slight differences are bound to occur between the actual and anticipated output of a process. These different do not always represent incurred loss, on occasions do not always represent incurred loss, on when actual loss may be less than the expected. Thus, abnormal gain results.

List of formula

Normal output/yield = inputs – normal loss/ scrap unit

Total normal cost = total cost of input –scrap value of normal loss

Normal cost per unit = total normal cost/ normal yield

Abnormal loss (unit) = normal output unit –actual output unit/ normal output unit – actual output unit

Abnormal loss (Rs.) = abnormal loss unit x normal cost per unit

Abnormal gain (units) = actual loss unit – actual loss unit

Abnormal gain (RS.) =abnormal gain unit x normal cost per unit

Inter process:

Cost of losing stock = given closing stock x total amount of cost column/ total amount of total column

Unrealized profit on closing stock = given closing stock – cost of closing stock

Calculation of inter process profit:

a. It percentage  of item process is given on processing cost, then

Inter process profit = total cost x %profit

a. If percentage of inter process profit is given on transfer price , then

Inter process profit =total cost x %profit / 100- %profit

Actual released profit = gross profit + unrealized profit on opening stock – unrealized profit on closing stock

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What is contract costing?Types of contracts

What is contract costing?Types of contracts

Contract costing

Concept of contract costing

The term 'contract' refers to the agreement between two parties to carry out a certain wok in a specified period of time. A contract is generally related to a large size with high amount of money and performed at site. There are two parties involved in a contact namely the contractor and the co

ntracted. The person or party executing the contract under certain terms and conditions is called the contractor. Similarly, the person or party to whom the work or job is executed is known as the contracted. The contract and the contracted make an agreement to get the work done against a certain sum of money which is called the contract price. A contract is generally related to contraction of building, dam, bridge, road, plants etc.

ICMA defines. "Contract costing is that form of specific order costing which applies where work is undertaken to customer's special requirements and each order is of long-term duration."

Contract costing is a form of job costing in which a separate ledger i.e. contract ledger is maintained for each job. It is also known terminal costing as the contract account is remained or closed after the completion of the work or contract. The main objective of the contract costing is to ascertain the total cost of contract so as know the profit or loss incurred form the contract.

Feature of contract costing

The main features of contract costing are mentioned in the following points:

a. Contracts are execute or performed at the site which are generally out of the contract's premises.

b. Most of the contracts involve jobs having large size and amount.

c. The duration of the completion of a contract may go beyond one accounting year.

d. Each contract is treated as a separate unit of cost for the purpose of cost ascertainment.

e. The contracts are executed as per the agreed specifications provided by the contracted.

f. Most of the items of costs incurred in a contract are direct in nature since a contract is carried out are the site.

g. Te contractor carried out the work on behalf of the contractee against a certain amount. The agreed amount is called the contract price.

h. The contractee  pays amount to the amount to the contractor an the basis of the work certified out of the completed work by the engineer of the contractee
Differences between job order and contract costing
The differences between job order contacts costing are mentioned below:

Similarities between job order and contract costing
The similarities between job order and contact costing are mentioned below:
• Both jobs and contracts are based on the specific requirements of customers. As a result, each job or contract is 'tailor-made' and there is no exact repetition of a job or contract.
• Both job and contract is terminal. Each job and contract can be identified from start to finish and, therefore, costs can be identified for each job a contract.
• The basic principles of contract costing are similar to those applied in job costing.

Types of contracts

There are three types of contract which are mentioned below:
a. Fixed price contract: the contract that is executed with the fixed price which is agreed by the contract and the contractee is called the fixed price contract. Under this contract, no modification is made in the agreed contract price irrespective of the changes in the price level of material and labour in feature. In such type of contract, the contractor is benefited when the price of material and labour decrease. In contrary to this, the contractee is benefited if the price of material and labour increase.
b. Fixed price contract with escalation and de-escalation clauses: escalation clause is a of agreement that that aims to reduce the risks that is causes due to the changes in the price of materials, labour and other services. Under this, the contract price is adjusted in accordance, with the changes in the price of material, labour and other services. The additional cost raised due to the increase in price is born by the contracted. Similarly, the contract price is reduced if the cost decreases below a certain percentage. It is called de-escalation or reverse clause. Escalation clause safe guides the interest of both the contractor and contractor against unfavorable price change in future. Such clause may also apply where material and labour utilization exceeds a particular limit. In this case, however, contractor will have to prove that excessive utilization is not because of decrease in efficiency. The contractor allows a rebate in the bills presented by him to the extent of the decrease in price.
c. Cost plus contract: the contract in which the contract price is determined by adding a certain percentage of profit on cost is known as cost plus contract. The cost plus contract is adopted to overcome with problem of fixing the contract price price caused due to nature of contract, duration of completion of  contract, uncertainly of material, change in the price level, new technology etc. this type of contract is mostly followed by the government for production of special articles not usually manufactured, urgent repairs of vehicles, roads bridge etc. under this types of contract, the contract starts the work and payment is made by the contracted gradually on the basis of the cost incurred in the work completed plus certain percentage of profit.

Preparation of a contract account

Under the contract costing, a separate account is opened for each contract so as to ascertain the position of profit or loss. Such account is called a contract account. All the expenses incurred in the contract like material, wages, direct expenses, plant and machinery etc. are debited whereas material returned, and material at end, plant at end, work in progress or contract price in case of completion of the contract etc. are credited in the contract account. The difference between the debit and credit represents the loss or profit. The profit earned under the completion of the contract is regarded as net profit or net loss in case of loss. The profit earned from the contract which is in progress or not completed is called notional profit. When loss takes place in such a situation, it is called net loss. It is because that a loss can never be notional, it is always real. The specimen of a contract account is presented below:

a. When contract is totally competed: some contracts are small and can be completed within a year. In such a case, total contract price is show on the credit side of the contract account as contracture's account. In this case, if credit is heavy then balancing figure on debit side is called profit and if the debit side is heavy, then the balance figure on credit side will be called a loss.

b. When contract is incomplete: large contract take number of years to completion. In this situation, amount of work certified and uncertified are found in the contract. Such amount of work certified and uncertified should be shown on the credit side of the contract account under the head work-in progress account.

1. Work certified: the value of work completed and certified by contractee's engineers and architchets is called work certified. As per provision of the contract, a fixed percentage of such work certified is paid by contractee to contractor. Some percentage of work certified is retained money. The work certified included the portion of notional profit therefore, if the cost of certified is lower than the work certified, the different amount is called motioned ,profit, if the amount  of cost of  work certified is higher than the work certified, the different will be loss.

2. Work uncertified: on the date of preparation of contract account, there may be some competed but uncertified work. The work of contract which is completed but not certified by the engineers is called work uncertified. It is always recorded at cost price and not on contract prices so as to avoid any profit element in it. The work uncertified never includes the portion of notional profit.

Treatment of materials in contract account
The procedures of recording materials in a contract account are as follows:

Treatment of plant in contract account

The machinery used for a contract is recorded in a contract account through two ways. They are

i. The cost of machinery and equipment to be used for a longer period or purchase for the contract is shown in the debit side of a contract account. The book value of the machinery and equipment is shown in credit side. The book value is calculated by deducting the depreciation from the cost of the machinery and equipment.

j. If the machinery and equipment is used for a short time in the contract, the amount of depreciation charged is only debited in the contract account. In such a situation, the purchase price in the debited side and the book value in the credit side are not shown. This is generally done, if the plant and equipment are not used till the end of te accounting period.

The treatments of plant and machinery in a contract account under different conditions have been presented below:

Methods of transferring profit
The profit earned against the completion of a contract is assumed to be the net profit and transferred to profit and loss account. Generally, a contract is completed in a long-period of time and the profit/loss is to be calculated at the end of each accounting period. Out of the national profit i.e. the profit earned during the work in progress, only some portion is to be transferred to profit and loss account. The during the work in progress, only some portion is to be transferred to profit and loss account. The remaining part of the notional profit is transferred to reserve. Therefore reason. There are some factors which are to be considered to transfer the proportion of notional profit to profit and loss account and reserved. They are:
a. Work certified: the work of a contract completed by a contractor is supervised and certified by the engineer of the contractee. The portion of the work completed and certified by the contractee is called the work certified. The work completed but not certified due to different treasons is called the work uncertified. Work certified is one of the bases of transferring the national profit to the profit and loss account.
b. Cash received: the contractor received cash from the contracted depending on the level of work completed. He/she received cash on the basis of work certified. The whole amount of work certified is not paid to the contractor. The portion of work certified that is not paid to the contractor is known as retention money. The relationship between the work certified and cash receipts is shown below:
Cash received (Rs.) = work certified x % of cash received
% of cash received = 100% - Retention rate
Wok certified = cash received (Rs.) x 100/ % cash received
The ways of transferring notional profit and loss account are given below:
a. Transfer of profit of incomplete contracts

The methods of transferring the motioned profit when is in profess are given below:

b. Transfer of profit if contracts are almost completed
The contact in which it is possible to estimate the of contract completion and feature cost to be incurred to completed the work and more than 90% of the work has been completed is called the almost completed contract. The methods of ascertainment of profit and transferring the profit and loss account are given below:

Some other items used in costing account

a. Labour cost: all the workers engaged at the site of a particular contract, irrespective of the nature of the work performed by items, are treated as direct workers and the amount of wages paid to them as direct wages. Such wages are to be charged to the particular contract directly. In case a worker (generally the supervisory staff) is engaged at two or more contracts, his total wages may be apportionment to different contract on the basis of time devoted to each contract or on some other equipment basis' wages accrued or outstanding at the end of the accounting period should appear on the debit side of the contract account.

b. Direct expenses: all expenses (other than material cost and direct wages) 

which have been incurred specifically for a particular contract are direct expenses and shall be debited to contract a/c. example of direct expenses are: here charges of special plant (not owned), carriage on materials purchase, travelling expenses relating to contract, etc.

c. Indirect expenses: there are certain expenses, which cannot be directly charged to a particular contract e.g., salary of general manager, salary of architect engaged at a number of contract simultaneously, salary of storekeeper, expenses of store and office expenses. Since these expenses are incurred for the business as a whole, they are to be apportioned to the different contract on some equitable basis.

d. Cost of sub-contracts: generally, the work of a specialized character e.g., road construction in a building, installation of lifts, electrical fittings, is passed on to some other contractor by the main contractor. In such cases, the work performed by the sub-contractor forms a direct charged to be contractor concerned and the sub-contractor price paid shall be debited to contract account.

e. Cost of extra work: sometimes, in case of a contract, some additional work o variations of the work originally contracted for may be required by the contractee. Since the additional work required will not be covered by the terms and condition of original contract, it will be the subject of a separate charge., if the additional work required by the contractee is quite substation, it should be treated as a separate contract and dealt with in a separate account to be opened for it. But in case the additional work is not substantial, the expenses incurred on extra work should be debited to contract account as 'cost of extra work' and the extra amount which the contractee has agreed to pay to the contractor should be added to the original contract price.

f. Contract price: the contract price is the agreed price at which the contractor undertakes to execute to contractor. The contractor account is credited with the contractor price if it has been completed. In such a case, the amount of contract price is debited to the 'contractee's personal account and credited to the 'contract account'. No entry is passed in respect of the contract price in case of incomplete contracts.

g. Retention money: generally, the terms of the contract provide that the whole of the amount shown by the archive's certificate shall not be paid to the contractor but a specified percentage or portion money (say 10% or 20%) thereof shall be retained by the contractee till the contract.  Te money so retained is known as 'Retention money'. The cash received from the contractee is credited to his personal account. The value of work (certified and uncertified) is debited to work-in progress account. The work-in-progress account is shown as an asset in the balance sheet after deducting the amount received from the contractee. In the beginning of the next year the work-in-progress account is transferred to the debit side of the contract account. On competition of the contract, the contractee's account is debited and contract account is credited by total contract price.

1. What is contract account? Mention its features.

Contract costing is a form of job costing in which a separate ledger i.e. contract ledger is maintained for each job.  It is also known terminal costing as the contract account is terminated or closed after the completion of the work or contract. The main objective of the contract costing is to ascertain the total cost of contract so as to known the profit or loss incurred from the contract.

The main features of contract account are mentioned below:

a. Contract are executed or performed at the sites which are generally out of the contractor's premises.

b. Most of the contracts involve jobs having large size and amount.

c. The duration of the completion of a contract may go beyond one accounting year.

d. Each contract is treated as a separate unit of cost for the purpose of cost ascertainment.

e. The contract are executed as per the agreed specifications provides by the contractee.

2. What is meant by cost plus contract and escalation clause?

Cost plus contract: the contract in which the contract price is determined by adding a certain percentage of profit on cost is known as cost plus contract. The cost plus contract is adopted to overcome with problem of fixing the contract price caused due to nature of contract, duration of completion of contract, uncertainly of material, change in the price level, new technology etc. under this types of contract, the contractee gradually on the basis of the cost incurred in the work completed plus certain percentage of profit.

Escalation clause: it is a clause of agreement that aims to reduce the risk is caused due to the changes in the price of material, labor and other services. Under this, the contract price is adjusted in accordance, with the changes in the price of material, labour and other services. The additional cost rose due to the increase in price of material, labour and other services. The additional cost raised due to the increase in price is borne by the contractee. Similarly, the contract allows a rebate in the bills presented by him to the extent of the decrease in price.

3. Write any five differences between job order costing and contract costing.

The different between job order costing and contract costing are mentioned below:

a. Size: The works perform under job order costing is comparatively small in size but the work performed under contract costing is larger in six that the job order.

b. Place of work: in job order costing, the manufacturing of product is carried out inside the factory premises but the production or construction work is carried out at site in contract costing.

c. Time: job order costing takes comparatively lesser time to complete the work whereas contract costing takes a longer time to complete a contract, even more than an accounting period.

d. Payment of price: the price under job order is paid after the completion of job but under a contract, it is gradually paid in different installment before the completion of the work.

e. Investment: preliminary investment is asserts is comparatively higher in contract costing than job order costing.

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