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
Dropping a segment - George's Grill analyzes profitability of three operating units: restaurant, bar, and billiards room. Revenues, variable costs, and attributable fixed costs (wh

You perform a travel cost study that looks at the relationship between the cost of visiting a lake (including costs of travel, value of time spent not working & any entry fees), it

An investment alternative in a project requires a capital cost of $102 millions completed at time zero. The investment will produce a stream of revenue of $50 millions per year ove


ASSUMPTIONS OF BREAK EVEN ANALYSIS 1. Fixed costs for all time remain constant. 2. All costs are divided into fixed and variable costs. 3. Selling price will not alter de

1. when using the internal rate of return method to evaluate capital spending on a new project, the project will be accepted if the internal rate of return is equal to or greater t

In January 2012, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the fol

What are the four elements of the budgeting cycle?

A company is considering the following alternatives: Alternative 1 Alternative 2 Revenues $240,000 240,000 Variable costs 120,000 140,000 Fixed costs 70,000 70,000 Which of the fol

What is the total after-tax annual cost of a machine producing bolts with a first cost of $45,000 and operating and maintenance costs of $0.22 per unit per day? It will be sold for