Job Costing

JOB COSTING

METHODS OF COSTING Job order costing Contract costing or terminal costing Batch costing Process costing Operation costing Single or unit costing Service costing Composite costing

Single or unit costing It is applied where the organisations produce single product and the whole production involve in manufacture of single product. In unit costing, cost is collected elementwise like Direct Materials, Direct Labour, Prime cost, Factory Overhead, Administration Overhead, Selling and Distribution Overhead etc. Cost per Unit = Total cost for the period Number of Units produced during the Period

Job Costing & Batch Costing Job costing: A Job is a specific order for work usually carried out within a factory or workshop and moves through activities and operations as a continuously identifiable unit. For exEngineering jobs, Printing jobs, ship building, Furniture making etc Batch costing: The batch costing is used when a quantity of similar and identical products are manufactured together as one Job. The batch costing is used in Printing, Packaging, Automobile and engineering components, Textiles etc

Cost Flowchart

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Seven-step Job Costing 1. Identify the Job to be costed 2. Identify the Direct Costs of the Job 3. Select the Cost-Allocation base(s) to use for allocating Indirect Costs to the Job 4. Match Indirect Costs to their respective Cost-Allocation base(s)

Seven-step Job Costing (continued) 5. Calculate an Overhead Allocation Rate: • Actual OH Costs ÷ Actual OH Allocation Base

7. Allocate Overhead Costs to the Job: • OH Allocation Rate x Actual Base Activity For the Job

9. Compute Total Job Costs by adding all direct and indirect costs together

Job Costing Overview

Cost Sheet for the year ended….

Cost of Goods Manufactured Calculates the cost of Direct Materials Used Accumulates the three product costs for the current period Adjusts the current period manufacturing costs to account for units actually completed 10

Income Statement

Figure carries forward from the Schedule of Cost of Goods Manufactured Period Costs are expensed as incurred

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