Chapter 5
Chapter 5
Chapter 5
TRANSPORTATION
Year of offering: 2021
Lecturer: Miss M.P Jeza
Chapter 5: Costing jobs, processes & services
How do we cost an order?
• Job costing is a form of specific order costing, it
applies when work is undertaken to a customer’s
special requirements and each order is a short
duration compared with orders to which contract
costing applies
• The work is usually carried out in a factory or
workshop , and the product moves through
processes and operations as identifiable unit
By-products
• These are products that are produced incidentally
and not by intention, from the material used in the
production of the main products
• E.g. by-products in the meat industry are wool,
bones, skin, etc.
• By-products have relatively low saleable value as
compared with the main products
• Since these products are incidentally produced,
they do not bear any portion of the joint costs
• Example on page 133 135
Service costing
• This is a form of operation costing that is used
where the same type of services are provided either
by an organisation or by a service cost centre within
an organisation
• Service costing might be applied to a service such
as car maintenance, hotel or catering
Units of service
• A unit of service is the indicator of how much must
be charged for the service rendered