Job Costing
Job costing is a method of costing that is used to determine the cost of a specific job or order. Job costing is typically used by businesses that produce custom products or services.
The cost of a job is determined by adding up the cost of all of the direct materials, direct labor, and overhead that are incurred on the job. Direct materials are the materials that are used to make the product or service. Direct labor is the labor that is used to make the product or service. Overhead is the cost of all of the other resources that are used to make the product or service, such as rent, utilities, and insurance.
Job Cost Cards
A job cost card is a document that is used to track the costs of a specific job. The job cost card typically includes the following information:
- The job number
- The description of the job
- The direct materials used on the job
- The direct labor used on the job
- The overhead costs incurred on the job
- The total cost of the job
Collecting Direct Costs
The cost of direct materials and direct labor can be easily tracked by using timesheets and material requisition forms. Timesheets are used to track the time that employees spend working on a job. Material requisition forms are used to track the materials that are used on a job.
Overhead costs are more difficult to track. Overhead costs are typically allocated to jobs based on a predetermined overhead rate. The predetermined overhead rate is calculated by dividing the estimated overhead costs by the estimated number of units that will be produced.
Conclusion
Job costing is a method of costing that is used to determine the cost of a specific job or order. Job costing is typically used by businesses that produce custom products or services. The cost of a job is determined by adding up the cost of all of the direct materials, direct labor, and overhead that are incurred on the job.