Theory of Job and Batch Costing

Theory of Job and Batch Costing

Q. What is Job Costing ? 

Ans. Job costing is a method of Costing which is used to find out the cost of non standard job which are made as per custom specification.

Q. What is Batch Costing ?

Ans. Batch costing is a modified form of job costing.

Q. Distinguish between Job costing and Batch costing ?

Ans. Job Costing :

1. In job costing single job is consider as cost unit.
2. A job indicate single article or goods.
3. Output produces against different order are purely different in size, designed, etc.
4. Job costing is huge where the customer order are non-repetitive.

Batch Costing:

1. In batch costing no. of identical job is taken as content.
2. Batch indicates no. of identical articles or goods.
3. The output produces against different order is identical in nature in most cases.
4. Batch costing is used where order is repeated.

Q. Distinguish between Job costing and Contract costing ?

Ans. Job costing:

1. [Basis: Size] - A job is small in size.
2.  [Place of work] - A work under job costing is performed under workshop.
3. [Time of completion] - A job usually take less time for completion.
4. [Investment] - There is heavy investment is assets.
5. [Nature of Expenses] - Expenses may be direct or indirect.
6. [Payment of price] - Selling price of a job is paid in full after completing the job.
7. [Transfer of Profit] - Profit earned on a job is entirely taken to P/L A/C.

Contract costing:

1. A contract is big in size.
2. Contract is executed mostly in site.
3. A contract take more time for completion.
4. There is less investment in assets.
5. Most of the expenses are direct.
6. The price is paid in various installment depending upon the progress of work.
7. Only proportionate profit is transferred to P/L A/C depending on completion stage of contract.

----------------------------------the end---------------------------------