Job Costing

Definition, Features, Uses, Examples

Job Costing Definition

Job costing, also called project-based accounting, is an accounting method that is used to calculate and track all the costs and expenses related to a specific job or order.

With job costing method, all costs of materials, labor, and overhead are accumulated and assigned to a specific job. In a nutshell, job costing method is the process of determining how much a work or order will cost to complete.

Job Costing Features

Under job costing, production usually takes place once a business receives a custom order request. The following list shows main features of job costing accounting method:

• Jobs requirements are determined first.
• Helps in calculating variances by comparing actual costs with the estimated costs.

Who Uses Job Costing?

Job costing system is mostly used by businesses that take custom orders or perform work according to customer specifications. The following is a list of businesses and companies that will benefit using the job costing method:

• Construction companies
• Advertising agencies
• Marketing companies
• Consulting firms
• Engineering offices
• Manufacturers (airplanes, ships, unique furnitures/cars)
• Workshops and repair shops