JOB COSTING ORDER
JOB COSTING ORDER
 Is a system that takes place when the
customers order small, unique batches of
products. This system determines the price
of each individual product and ensures that
the cost for each product is reasonable
enough for a customer to purchase it while
still allowing the company to make a profit.
 Each job prepared by batch or by order in
accordance with the customers’
specifications. The cost of materials used,
labor incurred and overhead applied is
summarized in WIP account while
maintaining a job cost sheet for each job.
Job order costing system can gain and track
information from financial resources like
material cost, payroll records, supplier voices
and overhead allocations. An accountant will
use this resources to gather the data and
calculate or track it using a job cost sheet.
They may also use a job order database to
track each product using a specific identifying
number for each product.
Each item tracked in the job order costing
system should have a job cost record that lists
the materials used to create that item, the
number of people that worked to make that
item, how long it took to make the item and
manufacturing overhead amount for that
product. This helps an accountant keep better
track of the money spent on each item and the
current inventory to prevent unexpected losses
from occurring.
MATERIALS USED IN JOB ORDER
COSTING
 Materials Requisition Form
A form that is used as a basis for the
recording of raw materials issuance.
This form facilitates that the transfer of
materials from storage to production.
1. Someone in production will fill out the form
to request for materials, approved by the
production manager.
2. The form will be forwarded to the warehouse
to be notified of the materials requested by the
department concerned.
3. The storage clerk releases the materials
requested by the department concerned.
4. Cost accounting department gets a copy for
recording purposes (charging materials to
production.)
 Time Ticket
As an employee works on a unique
order, they are often required to fill out a
timesheet recording the work they have
completed. Sections of a time ticket can
include:
 Employees name and ID number
 The specific job number they’re completing
 A list of each job
 The date each job started
 How many hours each job took the
employee to complete
 The employee’s hourly rate
 The total cost of the job
 Accounting and supervisor approval
 Job Cost Sheet
This sheet is the main source for
tracking an item to keep pricing and inventory
accurate. To maintain this accuracy, this job
cost sheet needs to track information including:
 The date the job was started
 The date employees completed the job
 The date the order was shipped to the
customer
 Customer information, usually their
address
 Job records information, including
overhead cost, what materials used and
labor information
 The summary of the final cost of the job
Each job information details above will have its
own section to clearly show the reader what
information is needed and what is currently
being tracked.
Job Order Costing in Manufacturing
Companies
 Manufacturing companies incorporate job
order costing as means of controlling
usage of a raw materials, production
equipment and labor hours. These
businesses consider each customer to