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Sukhpreet Kaur, Lovely Professional University Unit 10: Job and Batch Costing

Unit 10: Job and Batch Costing Notes

CONTENTS

Objectives
Introduction
10.1 Meaning and Definition of Job Costing
10.2 procedure of Job Costing
10.3 preparation of Job Cost Sheet
10.4 Batch Costing

10.5 Economic Batch Quantity
10.6 Summary
10.7 Keywords
10.8 Review Questions

10.9 Further Readings
Objectives

After studying this unit, you will be able to:
z z Explain the meaning and definition of job costing;

z z Understand the procedure of job costing;
z z Know the batch costing;
z z Explain the economic order quantity.

Introduction

Job costing is a method of costing applied in industries where production is measured in terms
of completed jobs. Industries where job costing is generally applied are printing press, ship
building, repair workshops, foundry, automobile garage and other similar manufacturing units
which manufacture to customer’s specific requirements.

Job costing is a method of costing whereby cost is compiled for a job or job order/work order.
The production is against customer’s orders and not for stock. The cost is not related to the unit of
production but is a cost for the job, e.g., printing of 1,000 ledger sheets, repairs of 10 equipments,
instead of printing one sheet or repair of one equipment. The elements of cost comprising prime
cost viz. direct materials, direct labour and direct expresses are charged directly to the jobs
concerned, the overhead/indirect expenses charged to a job is an apportioned portion of the
departmental overhead.

10.1 Meaning and Definition of Job Costing

CIMA terminology defines job costing as “a form of specific order costing which applies where
work is undertaken to customer’s special requirement. As distinct from contract costing, each job
is a comparatively short duration”. It implies that under job costing, production is always against
the customer’s special requirement.

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