Job Costing

What is Job Costing?

Job Costing is an accounting method used to determine the costs associated with a specific job, order, or project. It is commonly employed in industries where products are manufactured based on specific customer specifications and requirements, such as construction, manufacturing, and professional services.

Short Description: An accounting method used to track expenses associated with specific jobs or orders, typically in customized production environments.

• Direct Costs: Expenses that can be directly traced to a job, including materials and labor.
• Indirect Costs: Overhead costs that are allocated to jobs to capture true costs, such as utilities and rent.
• Job Work Order: A document that initiates a job, detailing customer requirements and cost estimates.

Using job costing, businesses can accurately calculate the profitability of each job by comparing the projected versus actual costs, aiding in pricing decisions and operational efficiency.