MANAGING FINANCE

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In a job costing system , the company accumulates costs incurred on a job in all parts of the value chain like Research and Development , design manufacturing , marketing , distribution , and customer service The following are the general approaches to job costing Identify the chosen job cost object Identify the direct cost of the job Select the cost allocation base to use for allocating indirect costs to the job Identify the indirect costs associated with each cost allocation base Compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job Compute the indirect costs allocated to the job and Compute the costs assigned to it Use and Relevance of Different Costing Techniques Apart form the Job costing the other systems of costing are detailed below Process Costing In this system the cost object is masses of identical or similar units of a product or service

Thus , there are various systems of costing like job costing , batch costing , process costing , contract costing , marginal costing , standard costing and activity based costing (ABC ) that are being used by different companies based on the nature of the activities of the companies concerned

Paper Topic: MANAGING FINANCE XYZ Co Plc SECTION I Design of the Proposed Costing System Though the problems faced by management differ from industry to industry and from company to company within the industry the costing system employed by the company would be able to provide the management the required information to solve the problems peculiar to the company Some manufacturing companies produce one or more standard products where the manufacturing processes are fairly established

The difference between job costing and process costing is shown below Detail Job Costing Process Costing Suitability Can be applied in the case of a batch Production Can be applied in the case of manufacturing of mass production Material Variation in materials required for different s Same materials

The product or service is often custom made Because the products and services are distinct job-costing systems can accumulate costs by each individual product , service , or job

Each system of costing has its own merits and demerits that determine the usefulness of the costing system that is being practiced by the company For the manufacturing company under study job costing system can be identified as the appropriate system of costing

In each period process costing systems divide the of units produced to obtain a `per unit ‘ cost

Under job costing the cost object is an individual unit , batch , or lot of a distinct product or service called a job

In the case of these products the company may employ a job costing system to find out the cost of each job specifically

In some other manufacturing companies the products may not be the same and will be manufactured only against customer s

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