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JOB COSTING Job Costing Kellie Brown Financial Analysis II Date: November 3, 2003 Job Costing Our team will attempt to explain the following accounting/ finance topic. The topic selected is Job Costing. During this summary/ outline we will try to portray and develop an in-depth knowledge and understanding of this topic. We will attempt to define job costing. We will discuss/ outline aspects that are associated with job costing. We will discuss/ outline some key features of job costing, and questions you should ask yourself about job costing. What is Job Costing? Job costing is the detailed aspect of a business/ organization in a financial sense. It is the process of breaking down each system of a product necessary for production. The key word here is cost. Organizations that do not consider themselves job shops often have certain special projects that may last several months, and involve multiple manufacturing orders. “Job costing gives production managers the ability to closely monitor the overall profitability of any job, along with the detailed cost components for each job task”. (Microsoft, 2002) What are aspects associated with Job Costing? When you think about job costing and what is involved, you might want to consider, in detail, the following aspects. · Manufacturing · Payroll/ Salaries · Labor/ Employees · Facilities/ Equipment · What type of product/ project is it? What are key features of Job Costing? The key features of job costing are as follows: · Information is recorded and maintained per job for labor, machine use, material and overhead. “The analyzing of each of these factors against estimated vales allows for quick analysis of trends, and unreasonable cost contributors”. (Assentis, 2003) · Overhead factors for labor can be defined at each work center and for each schedule preference, letting the overhead amounts become true reflections of the overhead in different parts of a company. · “Costs are “rolled up” per manufacturing order, and the total job cost updates the current cost field in the item’s master record”. (Microsoft, 2002) · The by-products of an order are automatically accounted for, posted back into inventory, and subtracted from the material cost of the order. · Variance analysis per job is conducted annually. What are the main questions you should ask yourself about “Job costing”? · What is the product? · How much does it cost? · How much money can I lose? · How much money can I make? · How many employees do I need, and how long do I need them? · How much is payroll? Example Product In the world of budding alternatives, it seems as though these alternatives are not as drastic as the norm. Today’s society wants a simpler life. This is the cause for medications, Internet, drive-thru restaurants and disposable everything. This is proven by the use of disposable diapers. However, there remains a hidden demand for old-fashion, cloth diapers.
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