Goseeko blog

What is Job Costing?

by Bhakti

According to Eric Caller, “Job Costing is a method of costing using continuously identifiable units, applicable materials, labor, and a specific amount of products and equipment that directly drive the production process as a cost.

The manufacturing process depends on the member of the order. Such production is not systematize and is essentially intermittent. Manufacturing goods are not for storage and will be shipped as soon as they are completed in all respects.

All work orders are different for each customer, so costs identification is individual for each job. The purpose of job costing is to see the profits or losses incurred in each job. Compare the cost of additional work with the estimate cost to indicate whether the estimation was incomplete or the actual is excessive. Such analysis helps to take corrective action to improve efficiency and facilitate revision of estimates.

Job Costing Meaning

The cost remains in the work in process account throughout the job. When the jobs are finally completed, they will be transferred to the finished product account. After completion of jobs , relocation of Using this method, accountants can understand the complex work that is going on towards the process of completion.

Industries that produce products as a job use this method. Shipping, auditing, maintenance and repair, installation, and any industry that makes products that are specific to their needs. Job costing is often the most efficient method in this situation.

Characteristics :

  1. Job costing is adopted due to manufacturing and non-manufacturing concerns.
  2. Following the job costing method These concerns produce goods for specific orders from customers, not inventory.
  3. From the start date to the completion date, a separate account will be opened for each job for which all costs incurred in that job will be deducted. This allows concerns to know the cost of each job.
  4. In job costing, the cost of each job is confirmed after the job is completed.
  5. Since each job is different from other jobs, each job needs to be processed individually under job costing.
  6. By comparing the actual cost of each job with the price charged to each job, you can see the profit or loss incurred by each job.
  7. With this method, production is intermittent, not continuous.
  8. The industry does not have to bear the sales and distribution costs because the customer places the order and collects the goods after production.

Interested in learning about similar topics? Here are a few hand-picked blogs for you!

You may also like