Chapter 4
Job Costing Concepts
Prepared by
Diane Tanner
University of North Florida
Methods of Tracking Product Costs
Job
Costing
Process
Costing
 Homogeneous products
manufactured
 Costs are traced or
allocated to each process
 Examples: Dog food,
cereal, canned vegetables,
bottles of beer
Operation
Costing
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 Manufactured to order
 Costs are traced or allocated
to jobs
 Separate cost records for
each distinct ‘job’ or batch
 Examples: Patients, printing,
buildings, patients, clients
Flow of costs is
 For products with differing
materials and similar
the same under
processes
all methods:
 Material costs are traced while RM → WIP →
conversion costs are allocated
FG → CGS
Overview of Job Costing
 Also called job order costing
 Appropriate for production of
 Tangible items—ships, bridges, cabinets, etc.
 Services—tax returns, lawn care, divorce cases, etc.
 Involves costs accumulated by ‘job’ usually for a
particular order or batch
• Normal costing used to apply MOH
– Applied using a predetermined OH rate based
on actual activity
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Job Costing Accounting
 General ledger
 One WIP ‘control’ account
 Subsidiary ledger
 Used with job costing systems to track the
individual job costs
 Consists of multiple job cost sheets
 One account/job cost sheet for each job
 Used to track/capture costs of a job
 Reconcile at end of period
Totals of all costs posted
to each 'job' in the
subsidiary ledger
=
Total amounts posted to
the control account in the
general ledger
Tracking Job Costs
Job cost sheet
Primary document for tracking individual job costs
Direct Materials
Traced from
materials
requisition forms
Job Cost Sheet
Job Number A - 143
Department B3
Item Wooden cargo crate
Date Initiated March 3
Date Completed
Units Completed
Direct Materials
Direct Labor
Req. No. Amount Ticket Hours Amount
Manufacturing Overhead
Hours Rate Amount
Cost Summary
Direct Labor
Traced from
time tickets
Direct Materials
Direct Labor
Manufacturing overhead
Total Cost
Unit Cost
Manufacturing Overhead
Applied using a predetermined rate
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Subsidiary Ledger
 Individual costs are posted to each job in the WIP
subsidiary ledger.
 The total of direct material, direct labor, and overhead
applied is posted to the WIP control account.
WIP Control
1,360
2,110
2,265
1,812
WIP - Job 27
800
570
450
360
WIP - Job 28
560
440
840
672
5,687
2,180
2,512
1,860
0
0
WIP - Job 30
WIP - Job 31
780
600
480
320
375
300
995
1,860
0
 The balance of the WIP control account must equal
the balance of the jobs in the WIP subsidiary ledger.
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Job Cost Example
Sanja Enterprises uses job costing and applies overhead based on machine hours.
Sanja’s budgeted annual information follows:
Direct labor cost
Factory overhead
Machine hours
14,800 hours @ $14.60 per hour
$248,492
8,875 machine hours
Actual data for Job #178
Direct materials requisitioned
$400
Direct labor hours
70 hours @ $15.20 per hour
Machine-hours
42 machine hours
Actual direct labor cost for all jobs for the entire year totaled $220,200. Actual annual
manufacturing overhead cost was $247,000. Actual machine hours for all jobs for
the entire year totaled 96,050. Show the calculation of the total cost of Job 178.
POHR =
$248,492
= $28.00 per machine hour
8,875
DM
DL (70 x $15.20)
MOH ($28 x 42)
Total job cost
$ 400
1,064
1,176
$2,640
The End
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