Job Costing System

What is a job costing system?

It's a system designed to track costs of a job when each product or service is considered a separate job. This happens when the customer defines their requirements as unique and could occur with a manufactured item, a project or professional services.

Each job costing system has some common features, including:

• ability to record costs of materials and labour attributed to the job
• dates started, completed, shipped or finalised
• reporting comparing planned to actual costs and profit margin

Some job costing systems use parent job and sub-job structure in an attempt to better manage projects. Here the plan is to have separate jobs for each of the trades with different start end dates and estimated costs but also have an ability to rollup the costs of all sub-jobs back to the parent. 

When companies move from a manual job cost system to job cost software they often discover the need to supplement the system with additional information maintained in spreadsheets or word processing documents. 

For example if the projects require the use of subcontractors then there is a need to obtain multiple quotes prior deciding on who best to let the contract to. This is a simple exercise for a small family business but larger firms employing project managers may need the various bids maintained and available for management to scrutinise. These are the type of issues that emerge when a company out grows their job costing system and then looks at alternatives.