The importance of job costing exercise makes it indispensable in the costing process, if one must make profit in any job undertaken. The relevance of this exercise centers on the fact that:
1. Job costing helps to facilitate pricing. Whenever a job is to be done, it is important to carry out some pricing checks. Whether or not a job will be accepted depends greatly on the price offered for the job. If the price covers all the costs to be incurred in executing the job as well as leave a margin for profit, then the job can be accepted, otherwise, it is rejected.
2. Job costing helps in determining expected profit from a job. By aggregating all known possible cost elements to be incurred in executing a job, one is able to determine the cost implication of a job before adding a profit margin. By this, one is able to determine job profit in advance.
3. Job costing assists in cost control exercise. By reviewing the records (and cost) of similar jobs done in the past, one is able to control the cost of current job.
1. Job costing helps to facilitate pricing. Whenever a job is to be done, it is important to carry out some pricing checks. Whether or not a job will be accepted depends greatly on the price offered for the job. If the price covers all the costs to be incurred in executing the job as well as leave a margin for profit, then the job can be accepted, otherwise, it is rejected.
2. Job costing helps in determining expected profit from a job. By aggregating all known possible cost elements to be incurred in executing a job, one is able to determine the cost implication of a job before adding a profit margin. By this, one is able to determine job profit in advance.
3. Job costing assists in cost control exercise. By reviewing the records (and cost) of similar jobs done in the past, one is able to control the cost of current job.
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