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Tip Of The Day #71 - Job Costing Just Time Consuming?

Barbara Steckly

Barbara Steckly

Job Costing Just Time Consuming?

Job costing is an accounting technique generally used in situations where each job is different, performed to the customer’s specifications, such as in industries like construction, fabrication, repair and maintenance works, and in services such as auditing.

Job costing involves keeping an account of direct and indirect costs so if your business is built on projects requiring quotes on time and materials, then learning the art of job costing is essential.
It’s one thing to make a careless or uninformed mistake on a project which compromises some of your profit, but to do it more than once is insanity.
Use the mishap as a learning experience instead. Continue to compare what you originally estimated to your actual costs in the end, so you can improve your accuracy and eliminate any more expensive discrepancies. Take the time to review all your projects and pull interim reports to see how you are doing on a regular basis.
Generally speaking, the most common loss of revenue on a project involves unforeseen extra time.
If you review these jobs and their progression weekly, you may find that the unplanned extra time is due to factors under your client’s control, not yours. If this is the case, armed with your evidence of the discrepancy, you can sit him down and discuss extra compensation for this.
Time is money, after all.

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