COSTING METHODS
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is job costing and in which industries is it primarily used?
Job costing is a method of costing where costs are accumulated separately for each job or order; it is used in industries like construction, shipbuilding, printing, and engineering workshops where each job is unique.
What is the primary objective of job costing in manufacturing?
To ascertain the cost of each specific job or order separately.
What distinguishes process costing from job costing?
Process costing accumulates costs for each process or department over a period and then averages them over the units produced, making it suitable for continuous mass production industries like chemicals, textiles, and oil refining.
What document is used to collect all costs for a specific job?
A job cost card or job cost sheet.
What is batch costing and how does it differ from job costing?
Batch costing is a form of job costing where a batch of identical products is treated as a single cost unit; the cost per unit is determined by dividing the total batch cost by the number of units in the batch.
What is the formula for calculating the cost of production per unit?
Total production cost divided by number of units produced.
What is contract costing and which sector commonly uses it?
Contract costing is a form of job costing applied to long-term contracts that typically span more than one accounting period; it is widely used in civil construction, infrastructure projects, and large engineering contracts.
What is the significance of a cost centre in cost accounting?
A location or department for which costs are separately collected.
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