What is Job Costing?

All About Businesses What Is Job Costing
Curious about the term “job costing” in bookkeeping? All About Bookkeepers can help you learn more. Check out our blog page to learn more about our industry.

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In accounting, estimating the price of a service is known as job costing. Job costing is critical in running a business because it generates a profit for the company and allows business owners to manage the influx of costs and balances. Proper job costing guarantees that the price of materials, labor, and third-party vendor fees are not only accurate but also add to the company’s success. With proper budgeting and planning, job costing can help your business grow.

Examples of Job Costing

Some of the materials that job costing covers include:


Paying workers their share involves not only employees of the specific company, but third parties and subcontractors. Think of all the people who perform services for the business and calculate their hours by their daily pay rate. Employees with different jobs and different amounts of hours will have to be accounted for separately.

Materials & Equipment

The materials that make up a company can include equipment, machinery, raw products, and goods. This will vary from industry to industry, for example, a construction company will employ different materials than a retail business. The materials and equipment can often be separated into direct material costs and indirect material costs. Direct costs include factors and items that are a part of a finished product, while indirect costs are materials that are used within a company but are not a part of the product.

An example of this for a retail company would be a screen printer and cleaning supplies. The screen printer helps print graphics onto clothing, making it a direct material cost. The cleaning supplies aren’t included in the final product but are necessary to perform a successful operation, categorizing them as indirect costs.

Overhead Costs

Factors such as the rent of a building, transportation, electricity, and other details needed to efficiently run a business are placed in what we call “overhead costs.” These can often be forgotten about but are extremely important in ensuring a company is running successfully. To efficiently calculate these costs, monitor how much you spend on each of these factors monthly, and then find an accurate estimate.

Benefits of Job Costing

As a business owner, calculating accurate costs for the different components of your business will help you in the long run. Job costing will help you make a profit and make it easier to manage the various parts of your company. By breaking apart the different factors, you can even examine what parts of your company are successful and adding to your revenue and which parts are not earning their worth. When it comes to labor costs and various products, this can help you make an educated decision about what your company can do to improve. With proper job costing, you can successfully estimate your revenue and produce accurate financial reports.

All About Businesses understands how important job costing is to a company. Our talented bookkeepers and accounting experts can manage your company’s income and produce accurate job-costing estimates. With us by your side, you can transform the way your company operates, producing better results as well as a larger profit. Don’t miss this opportunity, reach out to our team today. You can fill out our contact form or give us a call at 503-405-9466.

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