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The job cost accounting journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of job costing.
In each case the journal entries show the debit and credit account together with a brief narrative.
A job cost record forms part of a job cost system, and is used to accumulate manufacturing costs of direct materials, direct labor, and applied overhead for a particular job.
Direct materials and direct labor are actual values taken from material requisitions documents and time sheets. Applied overhead is allocated to the job on a predetermined basis (e.g. labor hours) and rate.
The marginal cost is the cost increase as a result of making one more unit.The concept is often used in production costing to decide whether production should be increased or not.
All things being equal, if the marginal cost is less than the selling price of a product then it is worth increasing production, as this will generate additional contribution towards overheads. On the other hand, if the marginal cost is greater than the selling price of the product, then production should not be increased.
A Contribution Margin Income Statement has the same information as a more traditional income statement but presented in a format which allows a business to understand which profit center (i.e. segment, sector, department, division etc) its contribution margin comes from. It is for internal use only, and the exact format will depend on the business requirements.
A variable cost is a cost which will vary in direct proportion to any production or selling activity.
The only question to ask is does the cost vary if the business changes its level of production or selling activity, if the answer is yes then the cost is a variable cost.
