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CMA Intermediate · Cost Accounting · Job Costing

Which statement about job costing is correct?

In job costing, the profit or loss of each job can be determined separately, which helps in pricing future quotations. Costs are traced to each order, and incomplete jobs at period end appear as work in progress.

  1. AEach job's profit or loss can be ascertained separately, helping in pricing future quotationsCorrect
  2. BCosts are never traced to individual orders
  3. CWork in progress cannot exist at the end of a period
  4. DJoint products are the main cost unit

Explanation

Because costs are collected job by job, the profit or loss on each job can be found and used as a basis for future estimates. Jobs unfinished at period end form work in progress, so the claim that WIP cannot exist is wrong. Tracing costs to orders is the essence of the method.

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