Job Costing Method is one of the costing methods that analyze the cost of the job. This system considers job as a cost unit which contains a sole order, individual project or contract. This is an isolation of the entire time, material and costs to a sole order or job. This cause for gathering and covering on the expenses and income connect with particular projects or job. Some customers will not order the all product, but they will just order for getting required job. Hence it is essential to discover out that job order’s expenditure throughout this method.
Batch Costing method is a modified type of job costing. Batch costing method is using by companies whose products are simply recognized by batches. In here batch of identifiable products are concerned as a sole job among unit price. Simply this is a method whereby recognize units produced are concerned as a sole unit and the amount of expenditure is allocated to the entire of that batch as an alternative of each unit. This used in ready-made garments, factories, industries, etc.
Similarities between Job Costing and Batch Costing
Actually they are lot of similarities between job costing and batch costing because batch costing is a modified form of job costing.
- The costing method means the system they are following to count the cost in batch costing is similar to the job costing apart from a one point of difference. Because in here batch has been set in as the cost unit as a replacement of a job. Simply the both are using the equal expenditure build up system.
- From both methods we can ascertain costs which business needs.
- The both systems are dealing with holding within a contract cost by book keeping method.
- Both Methods are makes use of appraised expenditure data as the base for necessary order price quotations.
Difference between Job Costing and Batch Costing
- The main difference is the way how the business is operated. Think like some company is setting up costing for general supplier. For this in job costing the business is operated one job at a time thus it creates more sense rather than batch costing. Batch costing would use various goods to be sold to a number of distributors by using a producing facility.
- In job order costing each manufactured goods is manufactured according to job requirement, for the customer demand. But in batch costing it is a mass production.
- When we talking about the production requirements they also act in different ways. In job costing production requirement for each production is matchless and unique. But in batch costing every one of units has similar common features for the production requirements.
- And there is a differentiation about the measure of output. In job costing as it name seems it is used for a job (sole) but in batch costing transacts with a measure of identical manufactured production units. In job costing the entire expenditure calculated are concerned as the expenditure of sole unit. For batch costing, they divided the entire expenditure from the quantity of products unites have produced.
- In job costing it covers up all fixed and changeable expenditures for producing a batch but in job costing they include by keeping an account of direct costs and indirect costs.
- In job costing perform job is treated as a cost unit however under the batch costing a collection of equal units which contains in the batch can be treated as a cost unit.
- Job costing is using by Furniture making, printing etc but batch costing is using by garments and drug industries.
- In batch costing they using a divide cost sheet means separate sheets for each batch by numbering but in job costing each job is treated as a sole job work.