Which of the Following Best Describes a Job Cost Record? (Complete Guide with Examples)
Discover the exact definition, components, purpose, and examples of a job cost record to ace your quizzes and understand job order costing. Get the best description answer upfront, plus step-by-step breakdowns, comparisons, and real-world templates for practical use.
Quick Answer: Best Description of a Job Cost Record
If you're facing a multiple-choice question like "Which of the following best describes a job cost record?", the top answer is:
A detailed record tracking direct materials, direct labor, and overhead costs for a specific job.
Here's a Quizlet-style MCQ derived from common accounting quizzes (e.g., accountingformanagement.org):
Question: Which of the following best describes a job cost record?
A. A summary of all factory costs for mass production.
B. A detailed record tracking direct materials, direct labor, and overhead costs for a specific job.
C. A general ledger for indirect expenses only.
D. A process cost report for continuous production.
Why B? In job order costing, each unique job gets a job number, and costs (direct materials via requisitions, direct labor from timesheets, and applied overhead at rates like 150% of direct labor or $50/machine hour) are accumulated on this subsidiary ledger. For example, Job 777-C might show $6,000 direct materials + $7,200 direct labor + $10,800 overhead (150% of labor) = $24,000 total.
This matches managerial accounting textbooks and FAQs, distinguishing it from process costing.
Key Takeaways: Job Cost Record Essentials
- Definition: A job cost record (or sheet/card) is a detailed subsidiary ledger tracking direct materials (DM), direct labor (DL), and manufacturing overhead (OH) for one specific job.
- Purpose: Accumulates costs per job number for pricing, profitability analysis, and performance evaluation.
- Components: DM (e.g., vinyl/inks), DL (hourly rates x hours), OH (predetermined rate, e.g., 150% DL or $50/machine hour).
- Used in: Job order costing for custom products (e.g., construction, custom manufacturing); 80% of construction firms use it (Construction Financial Management Association).
- Vs. Process Costing: Per-job tracking vs. departmental averaging for mass production.
- Benefits: 15-20% profitability improvement (k38consulting); 12% profit margin increase (addingtechnology survey).
- Format: Table with job #, customer, DM/DL/OH subtotals, totals.
- Real-World Impact: Helps mid-project corrections; without it, fixes are "too late" (contractor quote).
- Stats: Enables 10% overhead allocation; integrates with WIP for inventory valuation.
What Is a Job Cost Record? Definition and Purpose in Accounting
A job cost record is a core tool in managerial accounting, serving as a detailed expense report that captures every cost element for a unique production job (theintactone, agriculture.institute). It's part of the subsidiary ledger under Work in Process (WIP), accumulating DM, DL, and OH under a specific job number.
Purpose: Tracks spending on materials, labor hours, and factory OH per job (theintactone). Supports decisions like accepting special orders, pricing, and efficiency improvements. In 2026 manufacturing FAQs (bmss.com), it helps control expenses, value inventory (raw materials, WIP, finished goods), and boost profitability.
Job Cost Record in Job Order Costing
In job order costing, products are made to customer specs--each job differs in design, size, or material (theintactone). A unique job number (e.g., 555B) links all costs via documents like material requisitions and timesheets. This contrasts with mass production, providing granular insights for custom work like construction or repairs.
Components of a Job Cost Record (Direct Materials, Labor, Overhead)
Job cost records break costs into three categories (bmss.com):
- Direct Materials (DM): Traceable items (e.g., $2,500 vinyl/inks for Dinosaur Vinyl; zintego).
- Direct Labor (DL): Wages for job-specific work (e.g., $20,000 or $50/hour x 8 hours; k38consulting).
- Overhead (OH): Indirect costs applied via predetermined rate (e.g., $8,500 at $50/machine hour or 150% DL; total $31,000; zintego).
Example from PSU: Job MAC001 uses vinyl ($300), inks ($220 total), with indirect labor in OH.
Job Cost Record Format and Template
Standard format (double-entry-bookkeeping, psu.pb.unizin):
| Description | Quantity | Unit Cost | Total |
|---|---|---|---|
| Direct Materials | $160 | ||
| Vinyl | 1 | $300 | $300 |
| Black Ink | 2 | $50 | $100 |
| Direct Labor | 180 hrs | - | $180 |
| Overhead (135) | - | - | $135 |
| Job Total | - | - | $475 |
Sample Filled (Job A): Brought forward $100 + DM $160 + DL $180 + OH $135 = $575 (double-entry).
Job Cost Record vs. Process Costing: Key Differences
| Aspect | Job Cost Record (Job Order) | Process Costing |
|---|---|---|
| Production Type | Unique/custom jobs (e.g., construction) | Mass/continuous (e.g., chemicals) |
| Cost Tracking | Per job number (DM/DL/OH specific) | Departmental averages per unit |
| Overhead | Applied per job (e.g., 150% DL) | Pooled and allocated by dept |
| Docs | Job sheets, requisitions | Process reports |
| Pros | Detailed insights (12% margins) | Efficient for identical units |
| Cons | Time-intensive | Less precise for customs |
Job costing excels in variable environments; process for uniformity (projectmanager, optiproerp).
How to Prepare a Job Cost Record: Step-by-Step Guide
- Assign Job Number: Unique ID with customer specs/documentation (agriculture.institute).
- Gather/Authorize: Specs, estimates, approvals.
- Track DM: Requisitions from inventory (e.g., $425k materials in construction).
- Log DL: Timesheets (e.g., 12 workers x 40hrs x $25 x 36wks = $432k).
- Apply OH: Predetermined rate (e.g., 10% or $50/hr; $57k example).
- Total/Review: DM $967k + Indirect $83k + OH $57k = $1.1M (constructioncostaccounting).
- Update WIP/Close: Transfer to finished goods if complete.
Checklist: Automate tracking (Intuit); compare to budget real-time.
Pros & Cons of Using Job Cost Records
Pros: Better supervision, 15-20% profitability (k38); performance eval (theintactone); 80% construction adoption.
Cons: Complexity, manual errors, overlooked indirects (livecosts); end-of-job delays.
Real-World Examples and Job Cost Sheet Samples
- Job 555B (accountingformanagement): DM/DL costs + 150% OH applied to WIP.
- Job B (double-entry): DM $130 + DL $120 = partial; total with prior.
- Construction (constructioncostaccounting): Labor $432k + Materials $425k + Subs $110k + OH = $967k direct.
- Dinosaur Vinyl (psu): $931 total to finished goods.
- Zintego Example: $31k project cost.
WIP reports differ: focus on progress/billing vs. job-specific costs (constructioncostaccounting).
Benefits, Limitations, and Best Practices
Benefits: Detailed supervision, waste reduction, pricing decisions (theintactone); integrates with software for real-time insights (Intuit, k38).
Limitations: Overlooked indirects, communication gaps (livecosts).
Best Practices: Automate (QuickBooks); train teams (addingtechnology); real-time tracking; accurate OH allocation.
FAQ
What is the purpose of a job cost record in managerial accounting?
Tracks DM, DL, OH per job for costing, profitability, and decisions (bmss.com).
What are the main components of a job cost record?
Direct materials, direct labor, applied overhead.
How does a job cost record differ from process costing?
Per-job vs. per-unit/departmental; custom vs. mass (projectmanager).
Provide a job cost sheet example with direct materials, labor, and overhead.
Job A: DM $160, DL $180, OH $135 = $475 (see template above).
In job order costing, how is overhead applied to a job cost record?
Predetermined rate (e.g., 150% DL or $50/machine hr; accountingformanagement).
What is a sample filled-out job cost record template?
Use the table above; customize with job #, totals.