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PROCESS COSTING

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PROCESS COSTING
Job Costing
Job costing is the process of tracking the expenses incurred on a job against the revenue produced by that job. Job costing is an important tool for those who are pairing a relatively high dollar volume per customer with a relatively low number of customers. For example, building contractors, subcontractors, architects and consultants often use job costing, whereas a hardware store or convenience store would not use job costing.
Job costing using accounting software enables you to track a number of factors and analyze the results to aid decision making. A Job costing report helps you ensure that all costs involved in a job have been properly invoiced to the customer. An Estimates vs. Actual report compares quoted costs to actual costs, and quoted revenues to actual revenues so that you can analyze any variances between your quote and the actual result. You can then use the results of your analysis to create more accurate quotes when you bid on future jobs.
Using job costing will allow you to identify the most and least profitable areas of your business, so that you can focus on the profitable elements, and try to make the less profitable aspects of your business more efficient. It will help you to quote new jobs more accurately, and assist you in managing jobs in progress.
Examples
AI FAJER Propriety building construction industry
An example of an industry where job order costing is used is the AI FAJER Propriety building construction industry, because each building is unique. Thus, the job order costing can be divided by three parts, material labor and overhead respectively. Many kinds of raw materials will be used in building construction. The manufacturers and workers of custom equipment or custom cabinetry are also examples of companies that will keep track of production costs by item or job. The job cost records also serve as the subsidiary ledger or documentation for the cost of the work-in-process inventory, the finished goods inventory,

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