Job Cost Accounting – Its Relevance and Importance

Job Cost Accounting – Its Relevance and Importance




Most companies invest a lot of time and energy into the time of action of job cost accounting. To the lay person, this may seem like a lot of undue attention, but it is an important function which does calculate the performance of the company in relation with its expenses and revenue.

Job cost accounting takes into consideration various jobs in the organisation, and studies the expenses which have been incurred by the function against the revenues it has been able to generate.

There are several parameters that come clear with the use of job cost accounting. The first helps ensure that there is a certain level of profitability which is maintained in each function of the organisation. This also helps understand which the weakest link is, and helps take more specific remedial action.

Another important aspect of job cost accounting is being able to correlate targeted revenue against the actual revenue, and similarly, estimated costs against actuals.

Job cost accounting truly begins by studying the job and being able to monitor all the costs which are associated with a particular job. It then tries to collect all invoices and make sure that they are forwarded to the customer in a comprehensive manner. Further, they also need to document and establish how the revenues justify the costs which have been incurred.

To be able to collate an accurate record, you must be extremely careful and track every record. Make sure that expenses and revenues match and ensure all invoices have been presented properly. instead of using vague, general terms which could end up confusing later, make sure you use precise terms when making any entries.

Job cost accounting may seem like a laborious, complicate affair, but it is extremely basic to the organisation as it charts progress at every stage and sets direction for future action.




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