Final answer:
The difference between job order cost and process cost systems is primarily in the flow of costs. Job order costs are specific to individual jobs, while process costs are allocated across all units in mass production. Firms will adjust their production technologies to minimize costs, generally moving from labor-intensive to machinery-intensive processes as labor costs rise.
Step-by-step explanation:
The main difference between a job order cost system and a process cost system lies in the flow of costs. A job order cost system accumulates costs for each individual job, which is distinct and can vary significantly from other jobs. In contrast, a process cost system spreads the costs evenly across all units produced, as it's designed for mass production of similar items. The accumulation of costs and the documents used to track costs are typically the same in terms of the manufacturing cost elements (materials, labor, and overhead).
When considering different production technologies and changes in the cost of labor, firms will adjust their cost structures. As labor becomes more expensive, a firm will move from a technology with high labor use and low machinery use, to a technology that favors machinery. This shift towards labor-saving machinery occurs to minimize total costs and maximize efficiency.