Conceptualizing job costing, Cost Accounting

Conceptualizing Job Costing

Start to develop an understanding of job costing by thinking about the simple illustration. Jack Castle owns an electrical constricting company, Castle Electric. Jack gives a variety of products and services to the clientele. Jack has four employees, maintains a neat rented shop, a broad inventory of parts and apparatus, and a fleet of five service trucks. On a typical day, Jack will come at the shop early and line out the day's work to be done for his four electricians. Around 8:00 a.m., his electricians start to arrive, and he gives them their assignments, as well as the important parts and equipment they will need. They are then sent to the various job sites.

One of Jack's electricians name is Donnie Odom. On July 14, Donnie came at the shop at 8:00 a.m. He first dedicated thirty minutes getting his assignments and loading a service truck with required items to complete the day's work. His three tasks for the day comprised of:

x     Job A: Cleaning and reconnecting electrical connections and replacing the flood light atop a billboard (materials needed include one lamp at $150).

x     Job B: Replacing the breakers on the old electrical distribution panel at the office building (materials needed include 20 breakers at $20 each).

x     Job C: Pulling wire for the new residence under construction (materials needed include 500 feet of wire at $0.14 per foot).

Donnie productively completed all three tasks on July 14. He spent 1 hour on billboard, 2 hours on electrical panel, and 3 hours on residential installation. The other 2 hours of his 8-hour day were invested on indirect job administration and travel. During the day, Donnie used a roll of electrical tape ($3) and the box of wire nuts (60 nuts at $0.05). Donnie is given $18 per hour. Donnie drove the truck 100 miles on July 14, and he used a number of tools, ladders, and other specialized equipment. Jack is given $25 per hour, and he does not generally work on any specific job. Instead, his time is spent doing spot inspections of work, managing inventory, getting permits, and tending to the various other tasks connected with these jobs.

The "job costing" question arises is: How much did it "price" to change the light on the billboard, etc.? Clearly, the job cost included the direct costs of the job; specially, Donnie's direct labour time

(1 hour) and the direct material (one lamp at $150). But, the job could not have done without the shop, trucks, equipment, indirect labour time, Jack's efforts, tape and wire nuts, and so forth. These latter items comprise the indirect costs, or overhead, for the job. How then, are we to allocate costs to a specific job?

Posted Date: 7/21/2012 5:09:18 AM | Location : United States







Related Discussions:- Conceptualizing job costing, Assignment Help, Ask Question on Conceptualizing job costing, Get Answer, Expert's Help, Conceptualizing job costing Discussions

Write discussion on Conceptualizing job costing
Your posts are moderated
Related Questions
Requirements of Uniform Costing 1. Uniform costing systems must process the given features as: 2. Cost reports and statements should be organized and laid out in a same for

1. Why are marginal costs increasing? Why are they not always constant? You may give examples in some industries or just state two reasons at least.

A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At tha

Administration Costs Budget This represents the costs of all administration expenses. Every department or budget centre will be responsible for the preparation of its own bud

formula for calculting WACC

#question.discuss the importance of cost classification to a business organisation?

Loring Company had the following data for the month: Variable costs per unit: Direct Materials $4 Direct Labor 3.20 Variable Overhead 1 Variable selling expense 0.40 Fixed Ov

Economic Order Quantity This constitutes the quantity purchased of either raw materials or stocks which is considered most optimum. It is the quantity such minimizes both ord

Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2010. All prices and costs remain constant. Sales are 90% for cre

Example of Economic Order Quantity The EOQ model supposes : - Annual demand is recognized - Hold costs are constant and recognized - Ordering costs are recognized a