Question

Why is the job cost sheet important in a job order costing system? How is it used in determining a product’s cost?

Answer 1

Job cost sheet is a document of ultimate importance in job order costing system. To know the per unit cost and total costs allocated to any particular product or service, job cost sheet is referred.

Using the data of job cost sheet, many decisions are taken such as cost control or reduction, variance of actual and estimated cost, price fixation, loss making product or service is also known. Job cost sheet is an important document/record used for reporting purposes in an organization.

Total costs, such as direct cost, manufacturing overhead, selling and administrative overhead belonging to all products and services of a business are recorded in the job cost sheet. Along with this, other ancillary details such as job name, job number, customer name etc is also mentioned in the job cost sheet.