JOB COSTING PPT UNDERSTANDING THE COSTING METHOD FOR CUSTOMIZED PRODUCTSpptx

PROJECT ON JOB COSTING

1. Job Costing Understanding the Costing Method for Customized Products

2. What is job costing? Job costing is a method used by businesses to track and calculate the cost of each individual job or project separately. This system is mainly used when products or services are customized for customers rather than being mass-produced. Each job is treated as a unique project , and all costs related to that job—such as materials, labor , and overhead expenses —are recorded separately.

3. Features of Job Costing Applied to specific, customized jobs Costs are accumulated for each job separately Used in industries like construction, printing, and manufacturing Requires detailed record-keeping

4. Components of Job Costing Direct Materials: Raw materials used for the job 2.Direct Labor : Wages paid to employees working on the job 3.Overheads: Indirect expenses such as utilities, rent, and depreciation

5. Job costing process Receiving Job Order – Customer places an order Allocating Direct Costs – Material, labor , and expenses recorded Assigning Overhead Costs – Applied using predetermined rates Calculating Total Job Cost – Sum of all direct and indirect costs Review & Pricing – Analyzing costs and determining the final price

6. Example of Job Costing in a Company Company: Larsen & Toubro (L&T) - A Construction Company Larsen & Toubro (L&T) is a well-known construction and engineering company that works on different projects, such as building bridges, roads, and power plants . Since each project is unique and has different costs, L&T uses job costing to track and manage expenses. Why is Job Costing Important for L&T? ✅ Helps track actual expenses for each project. ✅ Ensures profitability by setting the right price. ✅ Helps in budgeting for future projects. ✅ Useful for financial reporting and client billing. This method helps L&T efficiently manage multiple projects and ensure that each one remains profitable.

7. Advantages and disadvantages Advantages of Job Costing ✅ Helps in precise cost estimation ✅ Useful for pricing decisions ✅ Assists in budget control ✅ Tracks profitability for each job Disadvantages of Job Costing ❌ Time-consuming process ❌ Requires detailed record-keeping ❌ Overhead allocation can be complex

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