Job Costing Method And Batch Costing Method Accounting Essay

There are assorted types of concern in the universe now. Each and every concern has to take a peculiar method to determining the costs are available in the concern. Simply bing methods is a method of roll uping cost. As in the diagram 1.1 costing methods are floating apart.

Specific Order Costing is the basic costing method. This method is suited to those concerns where the work consists of individually identifiable of contracts, occupations or batches.

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1.2 Definition

Job Costing Method

This is one of the methods that we analyze the cost of the occupation. If we identify the word “ occupation ” in here we can state that it as a little work or group of little activities in any production.

This system considers occupation as a cost unit which contains a exclusive order, single undertaking or contract. This is an isolation of the full clip, stuff and costs to a exclusive order or occupation. This cause for assemblage and covering on the disbursals and income connect with peculiar undertakings or occupation. Some clients will non order the all merchandise, but they will merely order for acquiring needed occupation. Hence it is indispensable to detect out that occupation order ‘s outgo throughout this method.

Batch Costing method

This is a modified type of occupation bing. Batch bing method is utilizing by companies whose merchandises are merely recognized by batches. In here batch of identifiable merchandises are concerned as a exclusive occupation among unit monetary value. Simply this is a method whereby acknowledge units produced are concerned as a exclusive unit and the sum of outgo is allocated to the full of that batch as an option of each unit. This used in ready-made garments, mills, industries, etc.


Actually they are batch of similarities between occupation costing and batch costing because batch costing is a modified signifier of occupation costing.

The costing method means the system they are following to number the cost in batch costing is similar to the occupation bing apart from a one point of difference. Because in here batch has been set in as the cost unit as a replacing of a occupation. Simply the both are utilizing the equal outgo construct up system.

From both methods we can determine costs which concern demands.

The both systems are covering with keeping within a contract cost by book maintaining method.

Both Methods are makes usage of appraised outgo informations as the base for necessary order monetary value citations.


The chief difference is the manner how the concern is operated. Think like some company is puting up bing for general provider. For this in occupation bing the concern is operated one occupation at a clip therefore it creates more sense instead than batch bing. Batch bing would utilize assorted goods to be sold to a figure of distributers by utilizing a bring forthing installation.

In occupation order bing each manufactured goods is manufactured harmonizing to occupation demand, for the client demand. But in batch bing it is a mass production.

When we speaking about the production demands they besides act in different ways. In occupation bing production demand for each production is nonpareil and alone. But in batch costing every one of units has similar common characteristics for the production demands.

And there is a distinction about the step of end product. In occupation costing as it name seems it is used for a occupation ( exclusive ) but in batch costing transacts with a step of indistinguishable manufactured production units. In occupation bing the full outgo calculated are concerned as the outgo of exclusive unit. For batch costing, they divided the full outgo from the measure of merchandises unites have produced.

In occupation bing it covers up all fixed and mutable outgos for bring forthing a batch but in occupation bing they include by maintaining an history of direct costs and indirect costs.

In occupation bing perform occupation is treated as a cost unit nevertheless under the batch bing a aggregation of equal units which contains in the batch can be treated as a cost unit.

Job costing is utilizing by Furniture doing, publishing etc but batch costing is utilizing by garments and drug industries.

In batch costing they utilizing a divide cost sheet means separate sheets for each batch by totaling but in occupation bing each occupation is treated as a exclusive occupation work.


Job bing

Such as hardware, ship-building, technology industries are utilizing this method.

Example No- 01

Tom and Jerry Engineering Company has accomplished all the plants in manus on 28th November 2011 which they absorbed on occupation work. But it was apart from occupation no. 112. Direct stuff of $ 50,000 and direct labor cost of $ 40,000 was showed in the cost sheet on 28th November 2011 separately as holding being carried on occupation no. 112. Until 28th November 2011, the cost was carried by the concern. As following it was the accounting twelvemonth for the last day of the month.

Direct stuff $ 3000

Direct labour $ 9000

Indirect labour $ 3000

Factory overhead $ 4000

The Tom and Jerry company pursues the carry out to do occupation engaged mill operating expenses. It was on the footing of 120 % of direct labor cost.

Organized a combined occupation cost sheet for occupation NO.112 executing with analystic computation.

outgo up to

28th November, 2011

outgo incurred on

28thNovember, 2011

Entire outgo

Direct Material

$ 50,000

$ 3,000

$ 53,000

Direct Labour

$ 40,000

$ 9,000

$ 49,000

Factory Operating expense

$ 48,000

$ 10,800

$ 58,800

$ 138,000

$ 22,800

$ 160,800

Example No- 02

The following inside informations in the tabular array are from Scooby Doo Company related to occupation 20460. Find out the merchandising monetary value for the occupation?

Sector A

Sector B

Direct labor hours



Direct labor rate for hr

$ 5

$ 6

Over caput per direct labor hours

$ 5

$ 5

Direct stuffs

$ 6,000

$ 4,000

Other operating expenses

30 % of full production cost

Net income border

35 % of gross revenues monetary value


Direct Materials ( 6,000+4,000 ) = $ 10,000

Direct labor cost ( 500 x5 + 300 x6 ) = $ 4,300

Operating expense for production ( 500+300 ) x5 = $ 4,000

Production cost = $ 18,300

Other operating expense ( 18,300 x30 % ) = $ 5,490

Entire cost = $ 23,790

Selling Price ( 23,790 x 65 % ) = $ 15,464

Batch costing

It is utilizing by the industries which manufactures merchandises as batches. Ready-made garments, drug industries and some of the companies which are bring forthing electronic parts of computing machine and etc are utilizing this method as their costing system.

Example No- 01

As to the records of “ Lion King ” ready-made garment, one client orders 300 unites of batch. Following inside informations are for 100 units. Calculate merchandising monetary value for 300 unites.


Direct stuffs


Direct Labours


Set up the machines


For design printing work


Prime cost


The rewards method was piecework rate program.

Production operating expense rate was 30 % of direct labor rewards cost.

For merchandising and other plants added 15 % of entire production cost.

Net income border was 35 % of gross revenues value.


Prime cost ( 68 x3 )

$ 204

Overheads ( 20 x13 x30 % )

$ 78

$ 282

Selling operating expenses ( 282×15 % )

$ 42

Entire cost

$ 324

Selling monetary value ( 324 x65 % )

$ 211

Time-Rate Method and Piece-Rate Method

2.1 Definitions

Wage means actuating people by giving a fiscal wages to them derive for their work. Simply we can state it is the types of the rewards programs. It is an understanding between labors and employers in an organisation. Hence it is more of import subdivision in an organisation. There are two classs in here:

Time Rate Plan

This is a simplest and of class the oldest type of rewards programs. In here the rewards are paid on the footing on clip which a individual worker corporate to finish the bring forthing a individual article. Simply we can state in clip rate program is employers are salaried for the entire clip they have spend at employment work. This can be ciphering in adult male hours or adult male proceedingss or else on day-to-day hebdomadal or monthly. The undermentioned expression is utilizing to cipher this method.

Gross Payment = the entire clip worked A- Rate per the clip

( Hours/ Minutes ) ( Per hour/ per minute )

Piece Rate Plan

This is besides identified as piece work, public presentation related wage. This is depending on the entire measure of the end products which the employer has produced. In here the worker means employer is paid a fixed payment for every individual unit of production regardless of the clip. Simply we can state it pays for the consequence therefore people say this as “ payment by consequence system ” . From this method concern can hold a better end product and besides they can do certain that employees are salaried for the amount of work they do. The undermentioned expression is used for this method.

Straight Unit Work = Quantity of good units A- Rate for a individual

Produced Piece

2.2 Similarities

The both systems are simple to understand and it is easy to cipher besides. Hence we can state both systems are simplicity methods.

And besides the both methods are economical.

Both methods are preferred and accepted by trade brotherhoods.

Both ways workers are holding a fiscal statement therefore worker is fulfilled.

After holding the fiscal wages they automatically become motivated by both systems.

2.3 Differences

First of all we can state both holding different significances. As I mentioned earlier clip rate is a system based on clip which workers work and piece rate is a method base on the merchandises which workers create.

In piece rate system it pays the worker following to the measure of good merchandises which they have produce regardless of clip. But in clip rate it pays the workers following for the clip that they have spent to merchandise the end products.

Time rate program provide an accentuation on immense sum of end products nevertheless piece rate program accentuation on quality of end product.

Through piece rate system it discrimination the employer and wages extra gross pay to skilled workers. But in clip rate it pays both skilled and unskilled workers same rewards.

Piece rate system need a work stoppage supervisor to look into the quality of the out puts but clip rate system does non necessitate it. Hence for piece rate program concern need to be a excess sum for care.

When we speaking about the ascertainment of labor cost, in piece rate program it supports o hole per piece labor cost in progress but clip rate program does non back up for this.

2.4 Examples

Time Rate Method

Example No- 01

A worker produced 10,000 merchandises in 8000hours. The workers paying rate is $ 2/- . When we calculate the pay for this worker through clip rate method:

Wagess = Number of hours A- rate per hr

= 8 000 A- $ 2

= $ 16,000/-

Example No- 02

If the worker spends 80 hours during 5 yearss. And if he is paid at a rate $ 15 per hr, the payment for 5days is:

Wagess = Number of hours A- rate per hr

= 80 A- $ 15

= $ 1200/-

Example No- 03

Within 50 hours on a hebdomad one employee merchandises 100 units in a company. The rate is Rs.2/- per minute.

Wagess = Number of proceedingss A- rate per minute

= 50 A- 60 proceedingss A- Rs.2/-

= Rs.6000/-

Example No- 04

500units produced by a worker in a company with in 60,000minutes in a month. The company rate is $ 4 per an hr.

Wagess = Number of hours A- rate per hr

= _60000_ A- $ 4


= $ 4000/-

Piece Rate Method

Example No- 01

If a employee merchandise 425 merchandises per hebdomad and he had spent 45 hours for this. His or her paid by at a rate of $ 8 per a merchandise,

Wagess = 425 A- $ 8

= $ 3400/-

Example No- 02

One employee has merchandise 1000units within 1250 hours with in amonth. The rate is about $ 4 per unit.

Wagess = 1000 A- $ 4

= $ 4000/-


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