Job costing

1. COSTING JOB COSTING

2. Meaning of job costing: Job costing is a costing method used to determine the cost of specific jobs or lots of production. Generally product manufactured according to customers specifications. Generally the job order system is used by manufacturing concerns where an order is produced to customers specifications. Such as building, contracting, machine tool manufacturing furniture job printing and general engineering. In these industries, the product is manufactured to customer requirements. A job may be a product, units, batch, sales, order, project, contract, service, specific programme or any other cost objective that is clearly distinguishable and other services used. The job in a job costing system may consist of single unit like house or it may consist of all units of identical or similar products covered by a single job or production order. COSTING

3. COSTING JOB COST SHEET: The focal point of a job order coating method is the cost sheet on which charges for direct materials, direct labour, and direct manufacturing costs can be accumulated as work on a job order progresses. It is in summary form and descriptive information as given in the production order. The design of the cost sheet and the number of columns to be used must be determined in terms of departmental and manufacturing characteristics of the business operation.

4. QUESTION: A factory uses job costing. The following cost data is obtained from its books for the year ending 31/03/ 1994. a) Prepare a job cost sheet indicating the prime cost, works cost, production cost, cost of sales, sales value. b) In 1995, the factory receives an order for a number of jobs. It is estimated that direct materials required will be Rs 1,20,000 and direct labour cost will Rs.70,000. Factory overhead as 60% of direct wages, administration overhead and the selling and distribution overhead as 20% and 15% of work cost respectively. And the profit is 1.5th of cost of sales. Prepare a estimated job cost sheet for the year 1995. DIRECT MATERIALS RS. 90000 DIRECT WAGES RS.75000 PROFIT RS.60900 SELLING AND DISTRIBUTION OVERHEAD RS.52500 ADMINISTRATION OVERHEAD RS.42000 FACTORY OVERHEAD RS.45000

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