Job costing

Job costing is a method of accumulating production costs separately for each distinct order, contract, or batch.

Also known asjob-order costing

ByHoang TruongUpdated June 30, 2026

FrameworkJob-order costing

See it move

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A stacked bar accumulates three cost layers for Job #42: direct materials at €800, direct labour at €500, and applied overhead at €300, reaching a job total of €1,600. The applied overhead figure derives from 20 machine hours multiplied by the predetermined rate of €15 per machine hour. Each segment of the stack is proportional to its cost, making it straightforward to see which element dominates the job's total.

Where it fits

SubjectCost AccountingCoreTopicJob & Process CostingCore

The formula

LaTeX

\text{Total Job Cost} = \text{Direct Materials} + \text{Direct Labour} + \text{Applied Manufacturing Overhead}

Variables

$A ppl i e d M an u f a c t u r in g O v er h e a d$: Predetermined overhead rate × actual driver units consumed by the job (€)

LaTeX

\text{Applied Overhead} = \text{Predetermined Overhead Rate} \times \text{Actual Driver Units}

Variables

$P r e d e t er min e d O v er h e a d R a t e$: Budgeted total overhead ÷ budgeted driver units; set before the period begins (€ per driver unit)
$A c t u a l D r i v er U ni t s$: e.g. direct labour-hours or machine-hours consumed by the job (hours)

Check yourself

PracticeCORE

A joinery workshop uses job costing. For Job #77, the cost sheet records: direct materials €650; direct labour at 18 hours × €22 per hour; and manufacturing overhead applied at €15 per direct labour hour. What is the total cost assigned to Job #77?

Select an answer to check your understanding.