# Job Costing
Job Costing is applied where production is undertaken against specific customer orders with unique requirements. Each job is treated as a separate cost unit; all materials, labour and overheads are accumulated against it so a price can be quoted and profitability measured per job.
It builds on concepts from earlier chapters – Cost Sheet, Material, Labour and Overheads – and applies them to a single, identifiable job.
## Spoilage vs Defectives
| Term | Meaning |
|---|---|
| Spoiled product | Cannot be rectified – totally out of use. |
| Defective product | Can be made good by extra (rectification) work. |
## Treatment of Defectives – Three Cases
1. Defects are normal to production
- Cost of rectification is spread over the entire batch / good output.
2. Defects arise due to abnormal reasons (e.g., bad workmanship, accident)
- Cost of rectification is transferred to Costing P/L – not loaded on good production.
3. Defects due to negligence of the Material Inspection Department
- Cost of rectification is charged to the Material Inspection Department (departmental responsibility).
This matches the standard normal/abnormal treatment used throughout cost accounting – normal losses become part of cost, abnormal losses hit P/L, and controllable losses are charged to the responsible department.