Advantages and Disadvantages of Job Costing

Job costing refers to a costing method under which the various costs such as material and labor cost related to production of a good or services are allocated to a product or service and then the price of that product or service is quoted to a customer. Given below are some of the advantages and disadvantages of job costing –

Advantages of Job Costing

  1. Job order costing offers a detailed analysis in the form of the costs of materials, labor and overheads and therefore it helps the company in allocating overheads at a predetermined rate.
  2. Bit helps the company in determining the profitability of a job, which in turn will help the company in deciding whether to take a particular job or not.
  3. Job order costing facilitates the estimation of the cost of a similar job and therefore it helps the company in avoiding duplication of work because if company has to quote price for a similar job than it can quote it on the basis of previous job costing method.

Disadvantages of Job Costing

  1. Job order costing needs a great deal of clerical work in recording of transactions related to it and therefore many companies tend to avoid this method of costing.
  2. Since overheads are allocated on estimation this method may not yield 100 percent accurate result and may lead to errors while quoting the price for a product or service.
0 comments… add one

Leave a Comment


Related pages


methods to calculate national incomeindirect quotes examplesassumptions of capm modelglobalisation disadvantagesdepreciation declining balancewhat are examples of current liabilitiesdupont analysis roedurable consumer goods definitionperfect competition advantagesfeatures of monopolistic competition in economicsprepaid expenses meaningasset vs liability definitionprofit push inflation definitionwhat is convention of materialitydemerits of online shoppingdisadvantages of financial institutionsadvantages and disadvantages of housing financemeaning of escrow account in bankconsignor consignee definitionadvantage of debit cardpros and cons of mixed economic systemwhat is the bartering systemaccounting concepts consistencycalculation of net worth of companycharacteristics of capital budgetingcapital account convertibilitydefinition of nondurable goodsdisadvantages of e bankingfunctions of derivatives marketdemat account introductionthe disadvantages of globalisationwhat are the economic advantages of specializationadvantages and disadvantages of process costingexpense meaning in hindidifference between term loan and overdraftmonopolistic economy definitionfifo method accountingdefine cosigneemonopoly and oligopoly market structuresinferior goods and normal goodspayback period advantageswhat are the advantages and disadvantages of decentralizationtypes of dividend policy theorydisadvantages of merger and acquisitionmerits and demerits of privatizationcomplentary goodsadvantages of demographic segmentationdebit card disadvantagesmeaning of monopolistic competitionbad debts entrywhat are the advantages of capitalismcrossing chequesdisadvantages of activity based budgetingbarter system and its difficultiesfree floating currency definitiondisadvantage of socialismfifo methodscrossing of a chequewhat are the advantages of urbanizationquota and tariffadvantages of conglomeratescheque defskimming policycorruption advantages and disadvantagesadvantages of advertising to manufacturersdifference between complementary and complimentarywhat are the characteristics of traditional economybluevsredexample of market penetration pricing strategydebit card wikipediadisadvantages of the gold standardhow is crr calculatedadvantages of autocracytransfer pricing advantages disadvantageseconomic growth advantages and disadvantagesfull form of gstsecuritization of accounts receivablefullform of tdsfeatures of socialist economic systemconglomerate companieswhat is deferred revenue expenditureregular payback perioddisadvantages of advertising on radiomerit and demerit of deregulation