Your goals for this “job costing” chapter are to learn about:
- Basic concepts in job costing.
- Information systems for job costing environments.
- Tracking job costs in the corporate ledger.
- Accounting for actual and applied overhead.
- Job costing in service, not-for-profit, and governmental environments.
- Modern management of costs and quality.
Chapter 19 provides information about job costing systems that are ideally suited to situations where goods and services are produced based on a specific order, to customer specifications, or in unique batches. The costs of such activities are traced to specific activities or products. An extensive illustration is developed to demonstrate how time, material, and overhead is tracked and assigned. The chapter discusses how modern technology has greatly eased the burden and facilitated utilization of accurate job costing.
It is important that a firm’s ledger mirror its cost assignment process, and the techniques by which this occurs are demonstrated. Because overhead is initially applied to jobs based on an anticipated rate, it is also important to grasp the final disposition of under- or overapplied overhead.
Job costing is also shown to be applicable in service, not-for-profit, and governmental venues. The chapter closes by giving consideration to additional modern techniques that can be used to manage costs and quality within an organization. Some of these techniques include Kaizen, lean principles, just in time inventory, and others.