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


advance payment journal entryconglomerate diversification strategy examplescompare socialism and capitalismdisadvantages of cash flowdisadvantage of jitoutstanding salary journal entryexamples of indirect quotationsideal ratio of debt equity ratioprepaid insurance journal entrywhat is leverage ratiosconsignee defineimpulse buying meaningadjusting entry unearned revenuedvr stockdefine contingent liabilitieswhat is oligopoly marketimplicit vs explicit costperfect competition market structure examplesjournal entry for prepaid insurancedifference between carriage and freightexamples mixed economybenefit of ppfsocialist economy vs capitalist economyfunctions of regional rural banksproblems of trade by barterusefulness of the statement of cash flowsbenefits of barteringproblems of barter systemadvantages and disadvantages of stock marketwhat is the meaning of demand draftconsignors meaningfifo method in cost accountingbearer certificate of depositfactors affecting elasticity of demandskimming pricing strategy definitionstrengths and weaknesses of mixed economywhat are some examples of command economyaccounting horizontal analysisdefinition of fixed deposit accountmarginal costing formatexamples of products with elastic demandwhat is planned economy definitiondisadvantages of living in rural areasdisadvantages of sales promotionidentify the advantages and disadvantages of a command economydiversification advantages and disadvantagesdisadvantage of decentralisationfifo method definitionpayback period meaningconglomerate organizationinternet banking disadvantagesa major difference between tariffs and import quotas is thatautocratic leadership stylesadvantages and disadvantages of using social mediadisadvantages of perfect competitionconglomerate growthdictatorship advantagesexample of substitute goods in economicsadvantages of stable dividend policyadvantages and disadvantages of inventorycompare and contrast socialism and capitalismadvantages of debit cardswhat is meant by fictitious assetsadvantages of autocracy governmentdefine unitary elastic demandwhat is the meaning of conglomerate companymarket skimming pricingadvantages and disadvantages of debit cardstrade discount examplefifo method definitiondefinition of drawer and draweedefinition cost push inflationdistinction between bookkeeping and accountancydeflation cycledemerits of mixed economydescribe the characteristics of a traditional economydifference between accounts receivable and payable