Advantages And Disadvantages Of Job Order Costing

Advantages Of Job Order Costing

* Job order costing offers a detailed analysis of the costs of materials, labor cost and overheads by functions and nature.

* Job order costing makes it possible to appraise the profitability of a job.

* Job order costing facilitates the estimation of the cost of a similar job.

* Job order costing allocates overheads on the basis of a predetermined rate.

* Job order costing makes easy to identify spoilage and defects to take corrective actions.

* Job order costing evaluates efficiency of different types of jobs with cost records by using statistical techniques.

Disadvantages Of Job Order Costing

* Job order costing needs a great deal of clerical work in recording material issue, wage computation and payment and overhead charges.

* Ascertainment of overhead rate needs allocation and apportionment of the overheads from service department to production department by using reasonable parameters like selecting a suitable basis.

* Strict control of costs associated with a job is difficult since overheads are allocated on estimation.

Related Topics
Concept And Meaning Of Job Order Costing
Difference Between Job And Contract Costing
Concept And Meaning Of Contract Costing

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