## Collection of Cost for a Job
In job costing, every element of cost must be traced to and identified with a specific job or work order. The accumulated costs are posted to an individual Job Cost Sheet maintained in the Work-in-Progress (WIP) ledger.
### Format of a Job Cost Sheet
A job cost sheet records, against each job number, the build-up of cost and the comparison of estimate vs actual:
| Heading | Details captured |
|---|---|
| Job identification | Job No., Description, Quantity, Blue Print No., dates (commenced / finished / delivery) |
| Cost build-up (date-wise) | Material, Labour, Overhead |
| Summary of costs | Estimated (₹) vs Actual (₹) |
Summary of costs typically shows: Direct Material → Direct Wages → Production Overhead → Production Cost → Administration and Selling & Distribution Overheads → Total Cost → Profit/Loss → Selling Price, plus units produced, cost/unit, and prepared-by/checked-by sign-offs.
### A. Material Cost
- Direct materials must be traced to specific jobs using a separate stores requisition for each job.
- The summary of each job's material cost is posted to the job cost sheet in the WIP ledger — usually weekly or monthly.
- Special material purchased for a particular job is charged direct to the job as soon as purchased, without routing it through the Stores Ledger.
- If surplus material is used on another job (instead of first returning it to stores), a Material Transfer Note is prepared and the cost adjusted in the WIP ledger.
### B. Labour Cost
- Direct labour is analysed job-wise using job time cards / sheets; all direct labour is booked against specific jobs.
- The periodical total for each job is posted to the job cost card in the WIP ledger.
- Indirect labour is collected from payroll books and posted against standing order / expense code numbers in the Overhead Expenses ledger.
- Idle time is booked against an appropriate standing-order expense code (in the job time card, or on a separate idle time card per worker).
### C. Overheads
- Manufacturing overheads are collected under standing order numbers; selling & distribution overheads against cost account numbers.
- Total overheads are apportioned to service and production departments on a suitable basis — e.g. machine hour, labour hour, % of direct wages, % of direct materials.
- Different absorption methods give different overhead amounts → different total cost for the same job.
- Accurately absorbing the overhead of every cost centre into each job is difficult; the practical solution is to apply a suitable overhead rate to each article/production order — essentially an arbitrary method.