ASCM-L05 — Job Costing
Understanding how costs are accumulated and assigned to individual jobs, contracts, or customer orders.
Learning Objectives
By the end of this lesson students should be able to:
• understand job costing
• identify industries using job costing
• prepare job cost sheets
• calculate total job cost
• determine profit on individual jobs
• answer examination-style questions
CONCEPT OVERVIEW
What is Job Costing?
Job costing is a costing method used when goods or services are produced according to specific customer requirements.
Each job is treated as a separate cost unit and costs are accumulated individually.
Characteristics of Job Costing
✓ Customer-specific production
✓ Each job is unique
✓ Costs recorded separately
✓ Job cost sheets maintained
✓ Profit can be determined for each job
ADVANTAGES & LIMITATIONS
Advantages
✓ Accurate job costing
✓ Assists pricing decisions
✓ Measures profitability by job
✓ Improves cost control
✓ Supports management decisionsLimitations
✓ Time-consuming
✓ Extensive record keeping required
✓ Overhead allocation may be subjective
✓ Administrative costs can be high
JOB COSTING VS UNIT COSTING
| Job Costing | Unit Costing |
|---|---|
| Unique products | Identical products |
| Separate cost sheet for each job | Average cost per unit |
| Customer-specific | Continuous production |
| Costs recorded individually | Costs accumulated collectively |
INDUSTRIES USING JOB COSTING
| Industry | Example Job |
|---|---|
| Construction | Building a house |
| Printing | Custom brochures |
| Furniture Manufacturing | Bespoke furniture |
| Shipbuilding | Construction of a vessel |
| Repair Services | Vehicle repairs |
Why Use Job Costing?
Job costing helps businesses:
• determine job profitability
• control costs
• prepare quotations
• support pricing decisions
• evaluate performance
JOB COST SHEET
Components of a Job Cost Sheet
| Cost Element | Description |
|---|---|
| Direct Materials | Materials used for the job |
| Direct Labour | Labour directly involved |
| Direct Expenses | Expenses attributable to the job |
| Overheads | Allocated indirect costs |
Total Job Cost
Total Job Cost
=
Direct Materials
+
Direct Labour
+
Direct Expenses
+
Allocated OverheadsWORKED EXAMPLES
Example 1 — Basic Job Cost
Job 101
Direct Materials:
£4,000
Direct Labour:
£2,500
Overheads:
£1,000
Total Job Cost:
£7,500
Example 2 — Profit on Job
Job Cost:
£7,500
Customer Price:
£10,000
Profit:
£2,500
Example 3 — Job Cost Sheet
Job Number:
205
Materials:
£6,000
Labour:
£3,500
Direct Expenses:
£500
Overheads:
£2,000
Total Job Cost:
£12,000
Structured Practice
Level 1 — Concept Check
Define:
a) Job Costing
b) Job Cost Sheet
Level 2 — Application
Explain why a construction company is likely to use job costing.
Level 3 – Examination Style Question
Job 310 incurred:
Direct Materials:
£8,000Direct Labour:
£5,000Direct Expenses:
£1,000Overheads:
£2,000Calculate:
a) Total Job Cost
b) Profit if the customer is charged £20,000
(5 marks)
📌 Additional structured questions are available in the 🎯 Question Papers + YouTube Explanation section.
∗ Additional structured questions are available in the Question Papers and YouTube Explanation section. Students should practise regularly and review video explanations for procedural clarity.
Enrolled students may submit questions from recognised textbooks, past examination papers or other genuine academic material for expert clarification through the Student Doubt Support facility.
📌 Job costing is a key AS Cost & Management Accounting topic and frequently appears in structured examination questions.
Students should master:
✓ Job Cost Sheets
✓ Cost Accumulation
✓ Profit Calculations
✓ Customer-Specific Costing
✓ Pricing Decisions
🎥 Full worked examples are available in the YouTube Learning Library.
📩 Students may submit job costing doubts through the Student Doubt Support facility.
Proficiency Check
Learn → Practise → Apply → Evaluate
1. Can you explain job costing?
2. Can you identify industries using job costing?
3. Can you prepare a job cost sheet?
4. Can you calculate total job cost accurately?
5. Can you calculate profit on a job?
6. Can you compare job costing with unit costing?
If unsure, revisit:
• Job Cost Sheets
• Cost Elements
• Worked Examples
• Industry Applications
Detailed Activity Solutions
Solution to Level 3 question
a)
Total Job Cost
£8,000
+
£5,000
+
£1,000
+
£2,000
=
£16,000
b)
Profit
£20,000
−
£16,000
=
£4,000
HOW THIS TOPIC APPEARS IN THE EXAMINATION
Common examination tasks include:
✓ Job Cost Sheet Preparation
✓ Cost Accumulation
✓ Profit Calculations
✓ Costing Method Comparisons
✓ Industry Applications
✓ Pricing Decisions
Self-Assessment Checklist
□ I understand job costing
□ I can prepare job cost sheets
□ I can calculate total job cost
□ I can calculate job profitability
□ I can compare job and unit costing
□ I can answer examination questions confidently
Continue Your Preparation
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PREMIUM RESOURCES
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GUESS PAPERS
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VIDEO ON DEMAND
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