Contemporary approaches to product costing


-) Total-life-cycle product costing
-) Target costing

-) Kaizen costing

-) Cost of quality
-) Benchmarking

Job Costing Activities



Activity Department
1 Prepare suitable design for the product Production planning
2 Prepare material requirements i.e. Bill of materials (BOM) Production planning
3 Issue of job order Production planning
4 Provisioning and issue of materials Stores
5 Deploy men and resources for operations Operations / Production
6 Prepare job cost sheet Costing
7 Cost control Costing

Process costing vs Job costing

Category Process Costing Job Costing
Product type Identical products Customer specific products
Environment Continuous and mass production Jobs are separate and independent
Cost computation Cost per unit of product is computed Cost per job is computed
Frequency of cost computation Costs are computed periodically Cost computation is made after the completion of the jobs.



Operational accountability function type of performance units

- Staff costs
- Procurement costs
- Direct costs (direct)
- Material costs
- Storage costs
- Overheads (indirect)
- Cost of capital
- Production costs
- Special costs
- External services
- Administrative costs
- Costs of human society
- Distribution costs
- Costs of environmental protection


Cost Accounting not only serves to identify and track costs, it also helps people understand and make decisions with respect to efficiency and capability. 


Expenses are conisder for:

+ / - Time selection

+ / - Operational


Examples include:


Purchase vs. raw materials, payment from wages, consumption v. goods and sevices, cost value v. goods and services, cost vlaue for power production, consumption factors based on factors related to production of goods and services.