Job Costing is the method of costing used to determine the cost of non-standard jobs carried out according to customers’ specifications. In this method is also known are separately identified and are coasted individually. Job costing is applicable to job printers, engineers, furniture makers, builders, contractors, hardware and machine manufacturing industries, repairing shops, etc.
The Costing Department prepares job cost sheet for each job, containing the production order No., and other details relating to the job. Where a job requires several major operations or components, sub-cost sheet. The job cost sheet is the document detailing the cost of the job under Direct material. Direct labour, Works overheads etc., It is not prepared for a specific period but for a specific job.
The cost of all the job in process are debited to the Work-in-Progress Control Account. On the completion of a job, this account is credited and Finished Goods Control Account is debited with its cost. The difference between the cost and the price charged is the profit or the loss on the job.
On the completion of a job Completion Report is submitted by the production shop to the planning Department with a copy to Costing Department. This report is an indication that further expenses on the job should cease and the job cost sheet be closed.
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