It is essential for a company to have a cost accounting system to be capable to exercise control over the real costs incurred compared with estimated expenditure. From this point of view of cost control, a costing system must not just be able to recognize any costs that are going out of control but must also provide a tool that can help in shaping the action that is necessary to put things accurately.
Job costing is an incredibly uncomplicated costing technique. It typically applies to an inimitable operation, such as fitting a part or carrying out an amendment to a product. In general, functions in which job costing is commonly used include:
Big companies also prefer to use job costing when they produce a multiplicity of different, and often distinctive, products. These products are often referred to as custom built and each is separately costed as a `job in its own right. This sort of production is illustrated as irregular (and usually referred to as job shop production) to make a distinction from the incessant or assembly-line production linked with the manufacture of a large number of identical units.
In job costing production, individual manufactured units are in general produced to meet an individual consumer’s requirements and production is not normally speculative. Costs are settled before manufacturing starts and
Contract costing usually relates to larger jobs (so is theoretically the same as job costing) and is longer lasting. Contract costing is usually used for things like civil engineering, shipbuilding, and defense. Contract costing is
Parts’ costing is uncomplicated and is simply a question of determining the cost of all of the physical parts and components used in a manufactured or engineered product. This costing works from the bottom-up in other expressions, .the cost of every individual component (i.e. per unit cost) is decided on the origin of the given standard supply multiple. As an instance of parts cost.