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CA Intermediate · Cost and Management Accounting · Job Costing

Which of the following is the most appropriate basis on which a job is closed and its cost determined in job costing?

In job costing, costs are accumulated separately for each job on a job cost sheet, and the total cost of the job is ascertained once it is completed, because every job is a distinct cost unit made to a customer's order.

  1. ACosts are accumulated for each job separately on a job cost sheet, and the total is ascertained on completion of that jobCorrect
  2. BCosts are accumulated for a department for a month and divided by total units produced
  3. CCosts are accumulated for each process and averaged over equivalent units
  4. DCosts are accumulated only for direct materials, with overheads written off to the costing profit and loss account

Explanation

Job costing treats each job as a distinct cost unit executed against a customer's specific order. Costs are collected on a job cost sheet and the total cost is known when the job is complete. Department-month averaging and equivalent units belong to process or similar costing methods.

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