2. explain with one example how job costing is important in any business in the service...

2. explain with one example how job costing is important in any business in the service industry.

Solutions

Expert Solution

Job costing in the service industry helps in determining the profits of each individual job. It will assist in ascertaining whether it is beneficial to perform the job or not.

For example, an advertising firm received an order to produce an advertising film. The price quoted is $25,000. Firm estimated the following costs:-

Direct labor cost = $10,000

Direct material cost = $5,000

Overheads = $5,000

Estimated margin = 20% ie 20% of $20,000 = $4,000.

The total amount that normally charged by firm is $24,000.

Price offered = $25,000

Therefore, the firm will accept the order. If the price offered below $24,000, then it would have been a cause of concern.

Thus, job costing helps in determining the profitability of an order.

Hi mate,

I would be grateful to you if you can provide a thumbs up and write one beautiful comment. It will improve my rating and let me continue my journey here.

In case of doubt, please comment. I will consider myself fortunate if I can help you.

All the best for your bright future.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Why are cash budgets important in business? explain with example.

Discuss Activity Based Costing. Explain what it is and how it differs from Job costing. Explain...

Discuss Activity Based Costing. Explain what it is and how it differs from Job costing. Explain why “true” product costs have only a minor importance in final market price determination. Define and give an example of a “cost object”, “activity” and “resources.” Define “cost driver” and give 4 examples of activity cost pools and an appropriate cost driver for each.

What is Digital disruption? Explain with any one example.

Explain how a business uses each one of these accounting concepts and why is it important?...

Explain how a business uses each one of these accounting concepts and why is it important? Here are the concepts: The balance sheet. The trial balance and preparation of financial statements. Preparing the trial balance.(step 4 of the accounting cycle) The worksheet.(step 5 of the accounting cycle) Closing entries.(step 8 of the accounting cycle) The bank reconciliation process. Preparing a payroll register and maintaining an employee earnings record. Journalizing transactions for a perpetual inventory system. Purchases and cash payments in...

Explain in detail ANY FOUR drawbacks (with example) of standard costing system. Also, explain briefly who...

Explain in detail ANY FOUR drawbacks (with example) of standard costing system. Also, explain briefly who should hold responsible for material and labour variances.

Please explain job costing and process costing in your own words along with how it can...

Please explain job costing and process costing in your own words along with how it can be used in daily business life.

Explain the Job Costing process and give a specific example. Your initial posts must be relevant...

Explain the Job Costing process and give a specific example. Your initial posts must be relevant to the subject and are REQUIRED to contain a word count of no less than 250 words. You may want to prepare your initial posts in Word for your word count, save them, and copy and paste to this board. Spelling and grammar DO count. Then include two more 3 sentence responces about the same subject

1. Using an example, explain how exchange rates influence business activities? 2. Explain the concept of...

1. Using an example, explain how exchange rates influence business activities? 2. Explain the concept of devaluation, and explain the effect devaluation has on the price of a country's imports.

Find a small business in your area that uses job order costing (JOC) - Choose one...

Find a small business in your area that uses job order costing (JOC) - Choose one product they make and discuss: Why you think they use job order costing. What does the product sell for? What costs would be included in direct materials - make a guess as to what direct materials cost? Estimate how long it takes to make this product. Make a guess as to what direct labor costs. Identify at least 5 costs that would be included...

please explain any business entity with 2-3 paragraphs.

Subjects