PPT - Job Costing & Batch Costing B Com Notes | EduRev

Cost Accounting

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B Com : PPT - Job Costing & Batch Costing B Com Notes | EduRev

 Page 1


JOB COSTING AND BATCH 
COSTING
1
Page 2


JOB COSTING AND BATCH 
COSTING
1
JOB COSTING
• Job costing is a method of costing whereby cost is compiled for a job or work 
order. The production is against customer’s orders and not for stock. 
• The cost is not related to the unit of production but is a cost for the job, e. g 
printing of 5000 ledger sheets, repairs of 50 equipment’s, instead of printing 
one sheet or repair of one equipment.
• The elements of cost comprising Prime Cost viz. direct materials, direct labor 
and direct expenses are charged directly to the jobs concerned, the overhead 
charged to a job is an apportioned portion of the departmental overhead.
• Applied in industries where production is measured in terms of completed 
jobs like Printing Press, Automobile Garage, Repair workshops, Ship 
Building, Foundry and other similar manufacturing units which manufacture 
to customers’ specific requirements.
2
Page 3


JOB COSTING AND BATCH 
COSTING
1
JOB COSTING
• Job costing is a method of costing whereby cost is compiled for a job or work 
order. The production is against customer’s orders and not for stock. 
• The cost is not related to the unit of production but is a cost for the job, e. g 
printing of 5000 ledger sheets, repairs of 50 equipment’s, instead of printing 
one sheet or repair of one equipment.
• The elements of cost comprising Prime Cost viz. direct materials, direct labor 
and direct expenses are charged directly to the jobs concerned, the overhead 
charged to a job is an apportioned portion of the departmental overhead.
• Applied in industries where production is measured in terms of completed 
jobs like Printing Press, Automobile Garage, Repair workshops, Ship 
Building, Foundry and other similar manufacturing units which manufacture 
to customers’ specific requirements.
2
DOCUMENTS USED IN A JOB ORDER 
COST SYSTEM
(i) Production Order or Manufacturing Order:
This is a works order authorizing the production department to produce a 
specified quantity of a product which constitutes the job.
(ii) Cost Sheet:
For recording costs, very often a separate record called a cost sheet is used. The 
cost sheet and the works order may also be combined, when costs are recorded on 
the production order itself.
(iii) Other Documents:
The other documents which are used as control mechanism by the dispatching 
function are: Material Requisitions, Tool Orders, Time Tickets, Inspection Order, 
etc.
3
Page 4


JOB COSTING AND BATCH 
COSTING
1
JOB COSTING
• Job costing is a method of costing whereby cost is compiled for a job or work 
order. The production is against customer’s orders and not for stock. 
• The cost is not related to the unit of production but is a cost for the job, e. g 
printing of 5000 ledger sheets, repairs of 50 equipment’s, instead of printing 
one sheet or repair of one equipment.
• The elements of cost comprising Prime Cost viz. direct materials, direct labor 
and direct expenses are charged directly to the jobs concerned, the overhead 
charged to a job is an apportioned portion of the departmental overhead.
• Applied in industries where production is measured in terms of completed 
jobs like Printing Press, Automobile Garage, Repair workshops, Ship 
Building, Foundry and other similar manufacturing units which manufacture 
to customers’ specific requirements.
2
DOCUMENTS USED IN A JOB ORDER 
COST SYSTEM
(i) Production Order or Manufacturing Order:
This is a works order authorizing the production department to produce a 
specified quantity of a product which constitutes the job.
(ii) Cost Sheet:
For recording costs, very often a separate record called a cost sheet is used. The 
cost sheet and the works order may also be combined, when costs are recorded on 
the production order itself.
(iii) Other Documents:
The other documents which are used as control mechanism by the dispatching 
function are: Material Requisitions, Tool Orders, Time Tickets, Inspection Order, 
etc.
3
JOB COST ACCOUNTING 
PROCEDURE 
• Cost of direct materials in respect of a job is obtained from copies of 
Material Requisitions costed by the Stores Accounting Section. 
• Cost of direct wages is obtained from various Time Tickets costed by the 
Payroll Department. Direct Expenses, if any, are also taken up.
• Manufacturing overheads are then applied at predetermined departmental 
absorption rates and recorded in the cost-sheet. 
• Various overheads may be recorded in the separate columns meant for these 
in the cost sheet which are totaled to obtain the total cost of direct material, 
direct labour, direct expenses and apportioned manufacturing overheads. 
• These four elements of cost together give the production cost or 
manufacturing cost of the job.
4
Page 5


JOB COSTING AND BATCH 
COSTING
1
JOB COSTING
• Job costing is a method of costing whereby cost is compiled for a job or work 
order. The production is against customer’s orders and not for stock. 
• The cost is not related to the unit of production but is a cost for the job, e. g 
printing of 5000 ledger sheets, repairs of 50 equipment’s, instead of printing 
one sheet or repair of one equipment.
• The elements of cost comprising Prime Cost viz. direct materials, direct labor 
and direct expenses are charged directly to the jobs concerned, the overhead 
charged to a job is an apportioned portion of the departmental overhead.
• Applied in industries where production is measured in terms of completed 
jobs like Printing Press, Automobile Garage, Repair workshops, Ship 
Building, Foundry and other similar manufacturing units which manufacture 
to customers’ specific requirements.
2
DOCUMENTS USED IN A JOB ORDER 
COST SYSTEM
(i) Production Order or Manufacturing Order:
This is a works order authorizing the production department to produce a 
specified quantity of a product which constitutes the job.
(ii) Cost Sheet:
For recording costs, very often a separate record called a cost sheet is used. The 
cost sheet and the works order may also be combined, when costs are recorded on 
the production order itself.
(iii) Other Documents:
The other documents which are used as control mechanism by the dispatching 
function are: Material Requisitions, Tool Orders, Time Tickets, Inspection Order, 
etc.
3
JOB COST ACCOUNTING 
PROCEDURE 
• Cost of direct materials in respect of a job is obtained from copies of 
Material Requisitions costed by the Stores Accounting Section. 
• Cost of direct wages is obtained from various Time Tickets costed by the 
Payroll Department. Direct Expenses, if any, are also taken up.
• Manufacturing overheads are then applied at predetermined departmental 
absorption rates and recorded in the cost-sheet. 
• Various overheads may be recorded in the separate columns meant for these 
in the cost sheet which are totaled to obtain the total cost of direct material, 
direct labour, direct expenses and apportioned manufacturing overheads. 
• These four elements of cost together give the production cost or 
manufacturing cost of the job.
4
TYPES OF ACTIVITIES 
Job costing involves the following accounting activities:
Materials: It accumulates the cost of components and then assigns 
these costs to a product or project once the components are used.
Labor: Employees charge their time to specific jobs, which are then 
assigned to the jobs based on the labor cost of the employees.
Overhead: It accumulates overhead costs in cost pools, and then 
allocates these costs to jobs.
Direct Expenses: Directly charged to individual jobs for which they 
are incurred.
5
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