## Friday, 7 July 2017

Job Costing cost calculation system is base on the order in which the collect fees will be charge to the production unit. The key to the calculation of costs base on order (job costing) is the cost of a job different from other jobs, and should still be trace separately. Add caption

## Costing Approach

##### Actual Costing:
Indirect costs are base on indirect cost rates to the actual activity of actual consumption multiply.
##### Normal Costing:
Indirect costs are base on indirect cost rates budget actual consumption activities multiply.

#### The characteristics of companies that use job costing are:

1. The company produces a wide range of products according to the specifications of the order.
2. The production cost is classify base on its relationship. With the product into direct production costs and production costs are not direct.
3. Direct production costs comprise costs of raw materials and direct labor cost.
4. Direct production costs account for certain staple production load order base on the actual costs of the case.
5. Load staple production per unit is calculate at time of order completion is produce by dividing the total cost of production. Incur for the order by the number of units of product produce in the specify order.

#### The benefits of using job costing for the management are:

1. Determine the sale price that will be charge to the customer.
2. Consider in regards to accept or reject the order.
3. Monitor the realization of the production costs.
4. Calculating the profit or loss of each order.
5. Determine load staple supplies finish products and products in process. Which will be present in the balance sheet.

## Steps-steps in the calculation of job costing are:

1. Identification of the work chosen as the cost object So that the details of the calculation of costs base on the order in accordance with the work being done. Then the work must be identify in accordance with the cost object.

2. The identification of the direct costs of work in identifying the cost of manufacturing. Which are categorize into direct manufacturing costs i.e. the raw materials directly and direct manufacturing labor.

3. Select cost allocation base that is use to allocate indirect costs to jobs Indirect manufacturing costs is the cost – the cost it takes to run a job but cannot be trace directly to a specific job.

4. Identification of the indirect costs associate with each cost allocation base Single allocation base on direct manufacturing labor hours can be use to allocate indirect manufacturing costs for the product.

5. Calculate the rate per unit of each allocation base costs use to allocate indirect costs to jobs.

6. To calculate indirect costs allocate to the job. The indirect costs of an occupation is calculate by diverting the actual quantity of each allocation base costs (one base allocation for each pool) associate with that job with the price of the indirect costs of any basic the allocation of costs.

7. Calculate the total cost of the work by adding the entire direct and indirect costs are charge to the job. The entire associate costs. Like the direct manufacturing which includes raw materials directly and direct manufacturing labor, as well as manufacturing costs indirectly.