A seminar Report on:

JOB COSTING AND MARGINAL COSTING

Submitted in partial fulfillment of the requirement of the degree of

Bachelor in Engineering By:
Bondre Manoj Sanjay (16)
Chaudhari Shubham Pradeep (17)
Chauhan Anand Umashankar (18)

Under the Guidance of:

Prof. Dongare Savita.

VIGHNAHARATA TRUST’S
SHIVAJIRAO S. JONDHLE COLLEGE OF ENGINEERING AND
TECHNOLOGY, ASANGAON.
Affiliated to
University of Mumbai
(2017-18)
JOB COSTING:
Job costing is accounting which tracks the costs and revenues by "job"
and enables standardized reporting of profitability by job. For an
accounting system to support job costing, it must allow job numbers to
be assigned to individual items of expenses and revenues. A job can be
defined to be a specific project done for one customer, or a single unit of
product manufactured, or a batch of units of the same type that are
produced together.
To apply job costing in a manufacturing setting involves tracking which
"job" uses various types of direct expenses such as direct labour and
direct materials, and then allocating overhead costs (indirect labor,
warranty costs, quality control and other overhead costs) to the jobs. A
job profitability report is like an overall profit & loss statement for the
firm, but is specific to each job number.
Job costing may assess all costs involved in a construction "job" or in
the manufacturing of goods done in discrete batches. These costs are
recorded in ledger accounts throughout the life of the job or batch and
are then summarized in the final trial balance before the preparing of the
job cost or batch manufacturing statement.

USING JOB COSTING:

Job Costing is the process of determining the labor and materials cost for
each job in a systematic way, and then using this information to create a
quote for the customer. Job costing or cost accounting can be used in
virtually any industry (especially service industry) to ensure that the
product pricing covers actual costs, overhead and provides a profit. The
purpose of any business is to make money, and job costing is the most
effective way to ensure that occurs.In a job costing system, costs may be
accumulated either by job or by batch. For a typical job, direct material,
labor, subcontract costs, equipment, and other direct costs are tracked at
their actual values. These are accrued until the job or batch is
completed. Overhead or "burden" may be applied either by using a rate
based on direct labor hours or by using some other Activity Based
Costing (ABC) cost driver. In either case, once overhead/burden is
added, the total cost for the job can be determined. If the accountant is
using a general ledger accounting system, which lacks true job costing
functionality, the costs must be manually transferred out of Work in
Process to Finished Goods (Cost of Goods Sold for service industries).
Of course, in the days of computerized job costing software, journaling
costs manually is an obsolete process. Such hand-journaling is
mandatory for companies that continue to use general accounting
software to do job costing. Enlightened accountants are moving forward
and using job costing software, thereby improving cost control, reducing
risk, and increasing the chance of profitability.
MARGINAL COSTING:
In economics, marginal cost is the change in the opportunity cost that
arises when the quantity produced is incremented by one unit, that is, it
is the cost of producing one more unit of a good.[1] Intuitively, marginal
cost at each level of production includes the cost of any additional inputs
required to produce the next unit. At each level of production and time
period being considered, marginal costs include all costs that vary with
the level of production, whereas other costs that do not vary with
production are considered fixed. For example, the marginal cost of
producing an automobile will generally include the costs of labor and
parts needed for the additional automobile and not the fixed costs of the
factory that have already been incurred. In practice, marginal analysis is
segregated into short and long-run cases, so that, over the long run, all
costs (including fixed costs) become marginal.
Managerial Uses of Marginal Costing:
The following may be listed as specific managerial uses:
(a) Cost Ascertainment:
Marginal costing technique facilitates not only the recording of costs but
their reporting also. The classification of costs into fixed and variable
components makes the job of cost ascertainment easier. The main
problem in this regard is only the segregation of the semi-variable cost
into fixed and variable elements. However, this may be overcome by
adopting any of the methods in this regard.

(b) Cost Control:

Marginal cost statements can be understood easily by the management
than those presented under absorption costing. Bifurcation of costs into
fixed and variable enables management to exercise control over
production cost and thereby affect efficiency.

In fact, while variable costs are controllable at the lower levels of

management, fixed costs can be controlled at the top level. Under this
technique, management can study the behaviour of costs at varying
conditions of output and sales and thereby exercise better control over
costs.

CONCLUSION:

It is concluded that the concepts of job costing and marginal

costing has been successfully studied along with their daily
industrial applications.