Job costing is the measurement or estimation of the cost that is involve in completion of a particular job such as production of goods, manufacturing or cost involved in some other sorts of work. The costs of different accounts are stored in the ledger account until the production batch is fully utilized. After this these costs are calculated and summarized in final trial balance calculations. A separate job costing statement is maintained for this purpose.
Job costing is an essential part of the managerial accounting. With the help of the job costing an estimation of the total cost of labor and material associated with a particular job is calculated. This information can be used later to prepare a quote for the customer involved in that project. The major use of job costing is occurred in a situation where estimation is being made for the customers that whether a certain project is going to recover its costs, including overheads and will generate a profit for the customer as well. There are two ways of calculating accumulated costs one is calculating the cost by using the job specifications and the other way is to calculate cost by using batch specifications that is currently under production.
During the process of job costing the cost of direct labor, material, equipment, overhead and other costs are calculated on the bases of their actual cost. All these costs are accrued till the completion of that job or the production of the batch. Nowadays different mangers and firms also use job costing software to complete is important task accurately and in an error free mode.
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