• A costing method where elements of cost are accumulated separately for each job or production order.

• The category of basic costing method which is applicable where the work consists of separate contracts, jobs or
batches, each of which is authorized by specific order or contract. CIMA

• A job is a specific order, it is an identifiable unit and it consists of a single order or contract.

• Job costing also known as job order costing, is a costing method where costs incurred for each element of
costs are identifiable with the job which is being completed based on the customer’s specific requirement.

• It is a form of specific order costing, where the product is produced or work is undertaken as an identifiable
unit based on the customer's specific requirements.

• It is applied in engineering works, printing, automobile servicing, furniture making, fabrication etc.

• Under this method costs are accumulated and collected for each job or order separately, each job is separately
identified and has its own characteristics.
• Features of job costing • Advantages
• It is a form of specific order costing. • It provides a detailed analysis of cost for each element

• Production or work is generally undertaken as per of cost

customer's order • It records cost more accurately
• Each job is treated as a cost unit
• It helps management to compare and analyse
• There may not be the uniformity in the flow of profitable and less profitable jobs
production from department to department.
• It provides a basis for the estimation of similar jobs to
• Cost of production is ascertained after the completion
be done in future.
of each job.
• It helps to measure profit or loss on each job.
• Job is done within the factory/workshop or customer’s
• It helps in the determination of predetermined
premise.
overhead rates in job costing.
• Product are not produced for stock purpose but
immediate delivery when it is completed. • It is useful in cost-plus contracts.
• Receiving an enquiry

• Estimation of the price of the job

• Receiving of order

• Production order

• Recording of costs (each job has a job cost card, bears a job number and used to collect all cost data)

• Materials (from material requisition notes/forms)

• Labours (from job timesheets, wages analysis sheet)

• Overheads (predetermined overhead rates)

• (in case of cost of an incomplete job; i.e. work in progress, it is essential to determine the closing value of WIP)

• Completion of job

• Profit or loss on a job

• Great deal of clerical work

• Scope of committing mistakes

• Cost comparison may become difficult due to the differences in jobs

• Cost ascertained in job costing is historical.