What kind of firm would use a job order cost system?

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drrab's profile pic

drrab | College Teacher | (Level 1) Adjunct Educator

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Almost anything that requires a bluepring will work: Plumbing, Heating, building, especially modular homes, which can be customized require a job cost analysis: how much for lumber, the right permits, window treatments, aluminum siding etc. The home building market will use a job cost. Any home alterations and repair come with a job cost generally itemized. Think in terms of material costs and labor, as well as miscellanious materials. Writing and editing use job costs-per page, per word etc.

Pool builders use job costs. (diggin with a back hoe, cement, design etc) Hope this helps.

 

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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A job order cost system is one in which a firm counts the costs for each separate "batch" of work separately.  In other words, the company treats different jobs as separate things and therefore tracks the costs of each job separately from the other jobs.  Because of this, a firm that uses this sort of system should be one whose jobs are not all the same.

For example, a car company that makes the same kind of car all day every day should not use this system.  All its jobs are the same and so this system would not be appropriate.  However, if a firm did many kinds of custom jobs (say, for example, publishing all sorts of different text books), it would be much more appropriate to use the job order cost system.

In short, then, the kind of firm that should use this system is a firm that does many jobs that are distinguishable from one another.

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