Question

Describe when it is appropriate for a company to use a job costing system

Answer 1

Job costing is one of the method of costng. According to this method cost are collected and accumulated according to jobs, contracts, products or work orders. A job represents the unit of costing.

Types of production activity suitable for job costing:

1. When the jobs are executed for different customers according to their specifications.

2. When no two orders are alike and each order/job needs special treatment.

3. Each job maintains its seperate identity throughout the production stage.

4. Where the work in progress differs from period to period on the basis of the number of jobs in hand.

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