JOB AND BATCH COSTING
With job costing, we are dealing with one off situations. We are dealing with organisations that carry out functions and services on a one at a time basis. Good examples of job costing situations include jobbing builders: the builder who will provide a householder, or a shop owner, or a factory owner with a service that he provides for no one else. The jobbing builder will build an extension, or renovate some property to a design that will probably not be copied anywhere else at any time: it is a one off job. Job costing can apply in non manufacturing situations as well as in manufacturing situations.
Even though many jobbing enterprises are small scale, we are not suggesting that all jobbing enterprises are small scale enterprises. An engineering shop may be working on a job for a customer that takes several months and many man and machine hours to complete.
Here are two definitions:
A job is “A customer order or task of relatively short duration”
Job costing is “A form of specific order costing; the attribution of cost to jobs”
Batch costing is not normally seen as much of an advance on job costing.
A batch is A group of similar articles which maintains its identity throughout one or more stages of production and is treated as a cost unit Batch costing is A form of specific order costing; the attribution of costs to batches.
Economic Batch Quantity = EBQ = √2AS/C
Where A = Annual Demand
S = Setting up cost per batch
C= Carrying cost / unit of production
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