3. 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
4. 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.
COSTING
5. QUESTION:
A factory uses job costing. The following cost data is obtained from its books for the year
ending 31/03/ 1994.
DIRECT MATERIALS RS. 90000
DIRECT WAGES RS.75000
PROFIT RS.60900
SELLING AND RS.52500
DISTRIBUTION OVERHEAD
ADMINISTRATION OVERHEAD RS.42000
FACTORY OVERHEAD RS.45000
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.
