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CA Intermediate · Cost and Management Accounting · Job Costing

Which of the following best describes the nature of a job costing system?

Job costing accumulates costs separately for each customer order or specific job because each job is identifiable and distinct. A job cost sheet records materials, labour and overheads for every job. Averaging costs over continuous output belongs to process costing.

  1. ACosts are accumulated for each customer order or specific job, which is separately identifiableCorrect
  2. BCosts are accumulated department-wise and averaged over all units produced in a period
  3. CCosts are accumulated only for continuous mass production of identical units
  4. DCosts are accumulated for each operation and divided by the total equivalent units

Explanation

Job costing is used where work is carried out against specific customer orders and each job is distinct. Costs are collected on a job cost sheet for each job. Averaging over a department's output describes process costing, not job costing.

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