1.1 Job Costing → Costs per individual job ie plumber, electrician etc JC are ‘one off’s’, unique / specific / individual to customers needs. Uses job
cards or job sheets to record all labour, material and overheads e.g electrician pricing a particular job.
1.2 Batch Costing → Producing a certain quantity of uniform/identical units, specific to customer's request. They have to be unique in some
way and not mass produced e.g a fleet of limited edition cars.
1.3 Contract Costing →A form of JC but where the job will have a long term scale and is completed over
more than one financial period e.g Construction of Wembley Stadium.
1.3.1 Difference between JC = much longer timescale, sales value is
much larger and sales invoices are often raised and progress
payments are made by a customer.
1.3.2 Price is normally negotiated in advance, however at various stages of completion, invoices will
be raised for the value to date. This is calculated by: Value of work - Retentions and payments
made to date = Payment due by Customer
1.3.3 WORK IN PROGRESS (CONTRACT)
184.108.40.206 DEBITS → These are EXPENSES e.g. Opening inventory of Raw Materials, Opening Net Book Value,
Materials Delivered to the site, Tools Delivered to the site, Supervisors Salaries, Direct Labour and
Subcontractors costs, Hire of Plant and Machinery and Apportioned Overheads.
220.127.116.11 CREDITS → These are: Unused raw materials returned back to Stores, Raw Materials Transferred,
Closing Inventory, Closing Net Book Value of Non-Current Assets
Certain assets, such as buildings and equipment, depreciate, or decline in value, over time.
18.104.22.168 CALCULATING PROFIT ON CONTRACTS
22.214.171.124.1 This is normally dependent on the percentage of completion of the contract:
126.96.36.199.1.1 Profit or Loss (Forecast) for a Contract: Contract Price - (Cost Incurred to date - Future Estimated
Costs) = Contract Profit or Loss
188.8.131.52.1.1.1 Contract profit/loss x (Value to date / Contract Price) x 100 = Profit in relation to the % of work
184.108.40.206.2 If the outcome of the contract is expected to be a LOSS then this must be reflected and recognised in
the Income Statement.
2.1 Gross Profit = Sales - Cost of Sales
2.1.1 Sales Margin% = Gross Profit / Sales x 100%
220.127.116.11 Mark Up % = Gross Profit / Cost of Sales x 100%