Job Costing

 

Job Costing

#Sucheta_Dalvi  

customized interior design- job

What is job costing? Where it applied? State the features, advantages, and limitations of job costing.

 Meaning

It is a method of ascertaining cost when the work is undertaken as per the customer specifications. Costs are determined for each job which is independent of other jobs. Under this method, individual jobs are identifiable and each job becomes a separate cost center. job costing is that form of specific order costing in which each job is treated as a separate entity cost are accumulated and unascertained separately for each job. a job maybe consists of a job, product The batch of product contract, service, or any other specific order.

Definition

According to CIMA London job costing is a form of specific order costing which applies where the job is undertaken to customer specification special requirements.

Applicability

It is adopted in following concern-

Printing press

Furniture making industries

Musical instruments

Repair shop

Painting works

Interior decorations

 

Features

1. Production is made what services are against the specific order number

2. Each job has its own characteristics and requires special attention

3. Costs of jobs can be found out only after the job order is completed

4. Each job becomes a separate cost center

5. Separate cost sheet id prepared for each job.

6. The profit or loss of each job is computed separately.

7. Production is not made for the purpose of storing.

Advantages of job costing

1. Job costing helps to locate a profitable job and unprofitable job easily.

2. Job costing helps in the preparation of estimates while sending quotations for similar job.

3. Job costing helps in future production planning of a similar job.

4. Spoilage and defective work can be easily identified with a specific job.

5. On the basis of separate cost sheet, it helps management in fixing selling prices.

6. It is very essential in the cost-plus contract method.

7. Cost data under job costing helps in the preparation of the budget in the future.

Limitations

1. The cost sheet is prepared for each job so it involves more clerical work.

2. It is expensive and laborious.

3. A system of budgetary control may not be used effectively.

4. It is historical in nature and so it is not useful in cost control.

5. If actual profit is less than the estimated profit corrective actions are not possible.

6. It requires more supervision as customized jobs are undertaken as per customer specifications.

7. Costing of minute jobs may lead to inaccurate results.   

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Dr. Sucheta Dalvi 

M.Com, BEd NET, MBA Ph.D.