Job costing

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.

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.