Costing of the job sounds manageable and easy to comprehend. But, there are a number of elements involved in considering a costing of the particular job. The enterprise cannot maintain the whole track record of expenses unless they use job costing to keep their financial expenditure. Job costing homework answers are here with details on the topic with everything covering it.
What is job costing?
In the industries, when the manufacturing happens according to the demand of customers, the job costing is applied. In other words, it is a cost of production against the order of clients.
For example, company XYZ produces chocolate p, q and r. Now, a retailer of chocolate places an order of 5000 q chocolates. So, the job cost will be the total production cost of 5000 q chocolates. It will not be counted for producing 1 q chocolate.
Job costing is used to calculate the profit remains after calculation of the cost of production and price of materials.
What are the elements associated with job costing?
- Direct Material
- Direct Labour
Companies use job cost sheet to record direct expenses on the materials. Direct material is the cost of equipment utilised for the production. All the raw materials are listed, and the price of them are calculated in total for getting a direct cost.
Working hours of every employee are listed with their hourly, daily or monthly wages. The total salary of total working people can be considered as direct labour.
Overhead is the indirect cost to a company. It may be the ongoing expense for years. It may not be directly counted as the expense but, it certainly makes a difference in the profit of the company. Even the smallest cost also matters in the calculation of benefit. So, indirect cost should be taken into account by calculating overhead of the job costing process.
Let us take examples of overhead cost with the help of Job Costing Homework Answers.
Company XYZ manufactures chocolates on the rented property. After producing 5000 chocolates for one customer company, it calculates the job cost. Raw material would be counted as direct material, and similarly, employee wages are direct labour.
But, the rent of total manufacturing time (e.g., rent of 3 days) will be calculated as indirect cost or overhead.
- Research & Development
Now, the customer company has requested different wrappers of chocolates for festival season. The efforts company XYZ puts to understand the festival for new wrappers, is overhead.
Moreover, changes in wrapper designing machine are referred as an overhead cost.
These two can be the prime example of overhead cost. Apart from these two, insurance payments, tax payments, office stationary supplies and depreciation value can be calculated as overhead or indirect cost. The list can go on.
Now that you have got the hang of job costing and the terms of job costing calculation let’s understand the documents required for calculation of job costing.
Job costing homework answers shows that there are mainly 3 types of documents included.
- Production order
As soon as the production order comes, the company can initiate the production. It is the sanction of the procedure by which the production can be started. In other words, it is a job order for the employees to start working on the job.
- Cost sheet
Cost sheet is required for the last total cost of the job. So each expense can be recorded in the cost sheet to present in the end with the production order. That will help to calculate the job value.
- Other documents
These are necessary documents by which company follows the next process in their job order. Below are the listed examples of other documents.
- Paper asking for extra materials
- Report of change request in the ongoing job process
- Storage and stocking documents
- Profit and loss statement of the job
- and so on.
Why would the companies do job costing?
Job costing homework answers throws light on beneficial factors of job costing.
- Overall job costing gives an idea of if the job order was feasible or not to the company. If it was feasible and profitable company can take more similar job orders in the future.
- Job costing minimises the work for the next process of a job as everything is calculated So, for the second time, less time can be used in the planning of labour cost, overhead and direct cost.
- It provides the precise calculation of overhead, which is helpful in determining the values of indirect cost for the next job process.
- On the other side, the company which has placed the order also has an advantage by job costing. The order receiving company can determine if the job delivered was up to the mark or not.
Are there any negative aspects of job costing?
- Job costing calculation is detail oriented method for specific costs calculations. There are times when job costing can be an expensive and time-consuming process as described by job costing homework answers.
- Although after doing lots and lots of job costing calculations and profit loss counting, job costing is less useful in the uncertain times, like recession and inflation.
- Job costing process is constant record keeping. Sometimes it can be tedious work, and if not done promptly, it can cost the enormous amount to the company.
After assessing all the aspects of job costing, job costing homework answers suggests that job costing should be done for the betterment of the enterprise, but with all the care addressed here.