What Are The Methods Of Costing And Please Tell Me About These?

The job costing method, costs are collected and accumulated for each job, work order or project separately. Each hob can be separately identified; so it becomes essential to analyze the cost according to the each job. A job card is prepared for the each job for cost accumulation. This method is applicable to printers, machine tool manufactures, foundries and general engineering workshops. In contract costing, when the job is big and spread over long periods of time, the method of contract costing it used. A separate account is kept for each individual contract.

                 Builders, civil engineering contractors, constructional, use this method and mechanical engineering firm's etc. batch costing is an extension of job costing. A batch may represent a number of small orders passed through the factory in batch. Each batch is treated as a unit of cost and separately costed. The cost per unit is determined by dividing the cost of the batch by the number of units produced in a batch. This method is mainly applied in the biscuits manufacture; garments manufacture and spare parts and components manufacture.

The various methods of costing available are as below:
• Job Costing - This is done, as the name suggests, on job works which may differ from case to case basis. By giving different job numbers and debiting the costs on the jobs, cost of each job work can be ascertained.
• Batch Costing - This is similar to job costing but pertains to batches.
• Contract or Terminal Costing - This is done for large contracts. Such businesses need not maintain costs separately as financial accounting will indicate the costs and expenses. In such contracting firms, the cost sheets are maintained for individual contracts. In the absence of expense budgets, inefficiencies are often hidden in such cost sheets.
• Single or Output Costing - This is done when the end product is single like a colliery or a power station. Cost sheets are maintained.
• Process Costing - This is useful when a product passes through various processes, yielding different by products of commercial value. This is useful in industries like refineries.
• Operation Costing - This is followed by mechanical engineering industries which make products or parts. Each manufacturing operation cost is taken into account. There is no difference between this and process costing.
• Operating Costing - This method is followed when the company does not have a specific product as output like the service industries.
• Departmental Costing - When an end product is ultimately manufactured by different departments this method can be useful.
• Multiple Costing - This is useful when a product is manufactured in an assembly line like an automobile.

Do job and process costing ever meet?