Job order costing
In one sentenceA costing system that collects costs separately for each production order, project or job; it suits made-to-order production such as furniture, contracting and workshops.
Simply put
Each job has a cost card on which you record the materials issued to it, the labor worked on it and its share of overhead.
In the end you know the exact cost of the job and compare it with its selling price, so you know the profit from each customer or project.
Worked example
A furniture workshop completed an office order priced at 25,000 SAR, and charges overhead at 50% of direct labor.
Direct materials12,000 SAR
Direct labor5,000 SAR
Overhead = 5,000 × 50%2,500 SAR
Job cost = 12,000 + 5,000 + 2,50019,500 SAR
Job profit = 25,000 − 19,5005,500 SAR
Don't confuse it with
Process costingIt suits continuous production of a uniform product, so costs are collected per process, not per job.
in FullScreen ERP
Cost centers in the general accounts show the profitability of each branch, project or department. General accounts