Methodology Of Job Costing

Job costing is a specific accounting methodology utilized in tracking the cost or expense involve in creating a unique or customized product. Although specific projects, such as industrial construction, require some sort of different operations, cost accountants make use of this costing means to keep track of the expenses of every single job so as to utilize the information for tax needs and analysis. Raw(direct) materials, direct labor, and overheads are the sections that can be found on standard Job cost sheet.

Sample Job Cost Sheet | Image Source: www.cliffsnotes.com

In creating products to fill customer orders, the employees assigned input every order and normally group cost into three distinct categories made up of; manufacturing overhead,

In this costing system, the emphasize on the production of standard products unlike the jo-order costing system where unique or specific products are produced. This implies that in this system, goods are produced and kept as stock.

In process costing, the costs of homogenous products that are indistinguishable from one other are accumulated. For example, if a company is producing ten thousand (10,000) bottles of Coca Cola beverage, it is a requirement that all the sugar used in the process, in addition to the labor engaged in the processing all be placed into one expense account, and then divide all by the amount of units produced. This gives the actual cost per unit of the standard products produced.

Advantages of Process Costing:

• Process costing provides managers with detailed information on production to get the actual reports on the various departments as well as workgroups. Manufacturing settings such as factories and utility companies whose production is continuous year round utilize process costing in their cost accounting practices

• Process costing, on the other hand, offers production managers the flexibility in ascertaining and maintaining same qualities in all production units and weigh performances over