These costs are recorded in ledger accounts throughout the life of the job or batch and are then summarized in the final trial balance before the preparing of the job cost or batch manufacturing statement.
The purpose of any business is to make money, and job costing is the most effective way to ensure that occurs.
In either case, once overhead/burden is added, the total cost for the job can be determined.
Such hand-journaling is mandatory for companies that continue to use general accounting software to do job costing.
Enlightened accountants are moving forward and using job costing software, thereby improving cost control, reducing risk, and increasing the chance of profitability.
Cost Codes are used for each phase, allowing "mini-budgets" to be generated and tracked.
These examples will assume that overhead is allocated on the basis of Direct Labor Hours.