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Job costing

26 September 2015

Can any one suggest the basis of cost driver to be considered for job costing in the job module. Example: at present we are considering material , labour, consumables, rent to direct expenses. And all other expenses to indirect cost. Please comment is it ok?

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2 Replies

Ashish Panda (27 Points)
Replied 27 September 2015

Factory Overheads is to be considered with Direct Labour. Office and administrative overheads is to be considered with Works/Factory Cost. And Selling and Distribution Overheads is also to be Considered with Works/Factory Cost.After that you can prepared the Job Cost Sheet.

Mukund (Nil) (36 Points)
Replied 29 September 2015

This is my suggestion for good costing system.For Job costing you should split things into 5 heads like 1) Material Cost 2) Conversion Cost 3) Distribution/Transport/Warehousing 4) Short term fixed cost 5) Long Term Fixed cost.

You can then easily trace what/which cost driver went wrong/right.In material you will look at price,consumption pattern & yield/scrap realization.The things involved to convert material to a product will be labor,electricity & to move it into a salable position will be direct commission,freight out,warehousing,Packaging,octroi/entry tax.

The overheads will be those of Machine depreciation,Allocation of Overheads of Common Manufacturing & also corporate overheads allocated.