Job Cost Record
A job cost record, also known as a job cost sheet or a job cost account, is an accounting document that tracks the expenses associated with a particular job or project. It’s part of the job costing system, which is a method used by businesses to track the costs associated with each specific job, as opposed to process costing, which calculates the average cost for large quantities of identical products.
The job cost record typically includes details such as:
- Direct Materials: The costs of all the raw materials that are directly involved in the production or completion of the job.
- Direct Labor: The wages paid to the workers who are directly involved in the production or completion of the job.
- Overhead Costs: These are indirect costs that can’t be directly attributed to a specific job but are part of the overall costs of running the business. These may include costs like rent, utilities, or equipment depreciation.
In addition, the job cost record will include information like:
- Job or Project Identifier: This could be a job number, a project name, or any other identifier used by the company to track individual jobs or projects.
- Job Description: A brief description of the job or project.
- Start Date and End Date: The dates when the job or project was started and completed.
- Total Cost: The total cost of the job, which is the sum of direct materials, direct labor, and overhead costs.
Job cost records are an essential part of managerial accounting. They help businesses understand the cost structure of individual jobs or projects, which can inform pricing decisions, budgeting, and profitability analysis. Job costing is particularly useful for businesses that produce custom products or services for individual clients, such as construction companies, consulting firms, or custom manufacturers.
Example of a Job Cost Record
Let’s use a hypothetical example of a job cost record for a construction company that is building a custom house for a client.
Job or Project Identifier: Job #1234
Job Description: Construction of custom 3-bedroom house
Start Date: July 1, 2023
End Date: December 15, 2023
Direct Materials:
- Lumber: $40,000
- Concrete: $15,000
- Plumbing Materials: $10,000
- Electrical Materials: $8,000
- Roofing Materials: $12,000
- Interior Finishing (Drywall, Paint, Flooring, etc.): $20,000
- Total Direct Materials: $105,000
Direct Labor:
- Site Supervisor: $25,000
- Carpenters: $50,000
- Electricians: $15,000
- Plumbers: $15,000
- Painters and Finishers: $20,000
- Total Direct Labor: $125,000
Overhead Costs:
- Equipment Rental: $10,000
- Building Permits: $5,000
- Utilities (Electricity, Water) at Job Site: $2,000
- Indirect Labor (Project Management, Administrative Support): $8,000
- Depreciation on Equipment: $4,000
- Total Overhead Costs: $29,000
Total Job Cost:
Total Direct Materials + Total Direct Labor + Total Overhead Costs = $105,000 + $125,000 + $29,000 = $259,000
This job cost record provides a detailed breakdown of the costs associated with Job #1234. The construction company can use this information for multiple purposes, such as billing the client, determining whether the job was profitable, planning and budgeting for future jobs, and more. Please note that this is a simplified example, and real-life job cost records may contain more categories and more detailed information.
