Job Costing
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Is Job Costing Difficult?

No! The process of job costing is quite simple. In fact, it does nothing more than take everything you are already doing and put it together, in a single fully-integrated set of accounting functions.

First, the estimate (which is done by those visionary individuals with detail-oriented minds) is entered into the job costing software. Second, bills are paid and payrolls are made. Third, the job costing information is a by-product of what has already been done: Estimating and paying bills.

Job costing software compares actual expenses to estimated expenses, job by job, phase by phase, line by line, and tracks the variances. When costs are out of line, management can track down the cause: Is a change order necessary? Were we double billed? Did we pay an invoice twice? Why does one crew always manage to require twice the estimated hours on job after job when the other crews are always within budget?

Doing job costing requires nothing new. What it does is integrate what is being done into a single piece of software. In the end, it is a simplification of the accounting process, which results in very useful information.

When it comes to controlling costs, it is the best way to do accounting.