Costing Methods

driven by the requirements of the customer.

is maintained separately for each job to record the costs of materials, labour and overheads pertaining to that particular job.

On receipt of a production order, the production department issues a requisition note to stores. Surplus / incorrect materials returned are logged on a materials return note. Both flows post to the job cost sheet.

Daily time spent by each category of labour on the job is recorded. Wage-analysis sheets include overtime, idle time and shift-differential loadings. Net direct labour cost is posted to the job.

Recorded for all the cost centres through which the job passes in the course of its completion. Summarised in an analysis sheet and posted to the relevant cost card.

Allocated as a pre-decided percentage of the total fixed / non-manufacturing overhead — basis can be time taken, labour input, complexity, or any other suitable parameter. Added only after the job is completed.

is maintained for each job in the financial ledgers so the monetary cost is known readily.

How Price is Fixed: Total contract price is fixed in advance — not dependent on material, labour or time movements during execution.; Where Used: Defence supply orders, EPC turnkey projects where scope is well defined.