Question

Question : Provide reflections on job costing system of costing system in managerial accounting unit.

Reflections on your overall research experience from the individual assignment (e.g. looking for
journal articles, reading and reviewing the literature etc.) What was enjoyable, what was difficult,
and any challenges you experienced?

Answer 1

A job costing system involves the process of accumulating information about the costs associated with a specific production or service job. This information may be required in order to submit the cost information to a customer under a contract where costs are reimbursed. The information is useful for determining the accuracy of a company's estimating system, which should be able to quote prices that allow for a reasonable profit. The information can also be used to assign inventoriable costs to manufactured goods.

A job costing system needs three kinds of accounts to be considered:

1. Direct Materials: This system should track the cost of materials which are in the job.Suppose if a business has a contract for constructing custom made machine, the cost of metal sheet in construction must be accumulated and hence should be charged to the job. The system compiles the cost with the track of manual tracking of materials on costing sheets, or the information can be charged by using online terminals in production area. Typically, materials for a job in the warehouse, and are charged to specific job at that time. If any materials being remainder return to warehouse, then the cost is subtracted from the job and added to return storage in warehouse.

2. Direct labor: The method of tracing labor cost is as similar to materials. In this job is related to services, direct labor may comprise of all the job cost. It is typically assigned to a job with punch card, timesheet or some thumb impressions at places. In such cases, the costs are identified to the respective jobs and the cost information can be applied to correct job.

3. Overhead: The system assigns overhead costs to one or more cost pools. At the end of each accounting period, the total amount in each pool is assigned to other jobs by using some allocation methods.

The above stated is the way how we allocate the job cost under managerial accounting to various jobs. For each and every job a special card or diary is mainted earlier it was used to be manual and now everything is computerized in today's world. Hence it has become more easy now a days.

For this reasearch I have studied so many literatures provided by various CPE's or CA's and due to their effort being put in litreature, i am able to write this. The journey has been interesting always and i read theories for the same being provided in various other books.