Costing Techniques

PART A
Main topics
 Job costing
 Batch costing
 Service costing
Job costing
 Work is undertaken to customers' special requirements.
 Each order is of short duration.
 Jobs are usually individual and separate records should be maintained on an individual job costing sheet.
Procedure
 Customer approaches supplier with job requirements.
 Details agreed between customer and supplier.
 Estimate prepared based on cost of materials, labour expense, overheads & profit margin.
 Estimate is accepted and job is scheduled.
 Actual cost recorded through records
Batch costing
 For costing purposes, each batch can be looked at as a separate job.

Total batch cost

Number of units made in the batch
Service costing
 Simultaneity
 Heterogeneous
 Intangible
 Perishable

Total costs for period

Cost per service unit 
Number of service units in the period
Service costing
 Road, rail, air transport: Passenger/mile, tonne/kilometre
 Hotels: Occupied bed-night or customer
 Education: Full-time student or course

Often uses complex cost units (combined forms).

Thank you