Job Cost Sheet

Job Cost Sheet

Question A

Provide and discuss an example of a situation where a company would use a job cost sheet. As part of YOUR analysis, be sure to explain the nature and importance of a job cost sheet.

Since a job order sheet is a document that shows a record of manufacturing cost, it has details of how a product was manufactured and thus the final analysis on the expenditure that was used in manufacturing the equipment, good or any other product that the company is dealing with. The job cost sheet will show the details of the expenditure at each and every stage. This will assist in the final pricing of the final product. Apart from knowing the expenditure at each and every stage of manufacturing, the job cost sheet is also important in allocating the exact amount of products. This won’t lead to situations where some products are over allocated while some crucial one under allocated.

Question B

Discuss the advantages and disadvantages of Job ORDER Costing. Be sure to include specific examples of the advantages/disadvantages that you discuss.

The main advantage of Job Order Costing is that it allows the managers to calculate the profit earned on each individual job. This aids in making decisions like weather it should be further pursued or abandoned. Job Order Costing also allows managers to have detailed information on the expenditure of each and every department. This statistics will help the mangers company at large in making critical decisions. This also helps in identifying loopholes in the system. Being in a position of being able to know all the details increases efficiency of the company as you are in control of all the undertakings.

Job Order Costing process simplifies record keeping as it relies on statistical calculations rather than the actual inputs. This is disadvantageous as employees are required to track all the materials used and labor used during the job. Strict controlling of costs associated with a task is difficult since allocation of overheads is done on estimates. Another main disadvantage of this is that it needs heavy clerical work as you have to record material issue, wage computation and payment of overhead charges.