Features and Procedures of Job costing

Features of Job costing

Product is against the customer's order and not on job stocks. Every job has its own characteristics and needs special skills and attention.

Procedures of Job Costing

The application of job costing method begins when a customer's order is obtained. After accepting an order, an individual work or job order number is assigned to every job for or separate order identification. Production order is then made giving authority for the job to start.  A job cost account for each job is then opened. In this account, all costs concerning to that particular job are recorded and this account closed merely when the job is complete. After completion of the job, an invoice is prepared or ready and served to the customer.

1. Materials for each job are made utilizing material requisition forms
2. Labour is charged on the basis of the amount of time employed to complete that particular job like recorded in time-keeping records.
3. Overheads are charged on the origin of a predetermined overhead absorption rate.

"Applied Overhead absorption rate is = Budgeted Overheads ÷ Denominator value"

The Denominator value where the denominator value refers to units of several specified overhead absorption base as illustrated machine hours and direct labour hours also.