Job costing defined:
Job costing is an accounting process commonly used in the AEC industry for assigning specific types of costs that are incurred on specific jobs, projects or other deliverables. This is done in lieu of other accounting approaches in which costs of specific types are often lumped together or assigned in different ways that may not accurately reflect the actual use or consumption of a resource or an input in a particular job or project.
The benefit of job costing is that it makes profitability much easier to manage–and improve. With job costing, cost assignments are simple yet accurate even when the jobs you’ve completed are very different from one another. Job costing also allows for data that is more relevant to the operations of the business to be maintained in lieu of more standard cost entries that may or may not apply to a specific job, product, project or line of business.
How to job cost:
As described above, job costing involves making separate accounting entries for different activities and processes, including:
- Materials – the accumulated cost of components used in a project or product.
- Labor – job-specific human resource inputs that are assigned to the jobs that used them.
- Overheads – costs that are pooled and assigned to specific jobs.
Having many jobs running concurrently often results in the incorrect assignment of costs, and it can be very tricky to get job costing right if you don’t have a system for it. Consider fixed overheads such as rent or factory space. How should such costs be allocated across jobs and projects that vary from month to month? Meeting financial targets and maintaining accounting consistency under such circumstances can prove to be not only challenging but very time-consuming as well. However, job costing simplifies things for you because the very nature of job costing makes cost assignments very auditable – it creates discrete verticals of information that precisely record how much of different inputs specific jobs consumed. Decision-makers, accountants and project managers can use easily accessible information provided by Core to see whether or not a specific cost really warrants being added to a specific job.
Streamlining job costing with Core:
Static record-keeping processes have the benefit of being simple, straightforward and efficient – but only as long as what they allow you to enter and track is all that you need to record and track. Monitoring a large number of variables across different projects, clients, and products can be very difficult. It’s much simpler when you have a program like Core, which centralizes your time and expenses, project management, billing, and accounting, complete with real-time data.
Core offers instant job costing, so you can assess profitability without any extra effort. Here are some more detailed capabilities and features you should know about when it comes to Core and job costing:
- Customizable, real-time dashboards that display your business’s KPIs as well as project, financial and resource statuses provide you with direct, actionable insights
- A specialized project performance screen to keep you abreast of project profitability, earned value, utilization, margins, and other essential information
- Numerous reports–including profit and loss by project, project time and expenses, allocated vs. earned revenue with forecast, estimate comparison, and budget comparison–that can be memorized, marked as favorites, and scheduled to be sent to stakeholders automatically
- Project templates that can be created from your previous projects in order to efficiently estimate costs
- Phases, sub-phases, and tasks to properly assign work and track all costs at the most effective levels
- Job costing at the invoice level
- Rapid, intuitive time and expense entry, including time cards, timers, automated time tracking, and expense recording in multiple currencies
- Flexible invoicing options, including progress, automatic, and batch billing for multiple contract types, including percent complete, fixed, phased, and much more
- Customizable notifications that alert you about the status of your work
- Comprehensive mobile apps to check KPIs, create and send invoices, run reports, and enter time and expenses
With these job costing capacities, analyzing and widening your project margins is easier than ever.