Job Order Costing: © 2018 Pearson Education, Inc
Job Order Costing: © 2018 Pearson Education, Inc
Job Order Costing: © 2018 Pearson Education, Inc
Job Order
Costing
Companies
use a job cost
record to
document the
product costs
for each job.
• Purchasing materials:
– Often stored for later usage
• Using materials in production:
– Direct materials
– Indirect materials
• Materials purchased and materials used in
production are usually different amounts.
When materials
are received on
the production
floor, the direct
materials are
recorded on the
job cost record.
Most companies
use electronic
labor/time to
track labor costs.
If a manual
system is used,
each employee
completes a
labor time record
to track and
assign direct
labor to jobs.
• The total hourly rate for the company is $80, which is $50
per hour for direct labor plus $30 per hour for indirect
costs. If the firm desires a profit equal to 75% of the firm’s
cost, the price would be calculated as follows: