Job costing

Sometimes a separate form is prepared for each item, and sometimes a running list similar to the following is used: This form provides essential documentation to track inventory. Direct labour should be charged directly to the individual job. This is usually done in one of two ways: an association with labor hours or using activity based costing.

Allocating overhead Any non-direct costs are pooled as overhead; overhead is then allocated to jobs based upon usage. Basic Job Costing Job costing also called job order costing is best suited to those situations where goods and services are produced upon receipt of a customer order, according to customer specifications, or in separate batches.

Some other systematic and rational approach could have been developed. Two things should be made clear. After a little effort, he was able to connect with the people who perform this work. The procedure that is commonly applicable to a normal sale transaction equally applies in case of job costing.

This is done by the engineering department with consultation with the production planning department. One such job was the new home of Aba Obekie.

One must also consider the cost of rent, trucks, and so forth. Consequently, it is best to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

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What is Job Costing?