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 ex-
Engineering 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

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Income Statement

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

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