Abstract
For development and encouragement of the innovation within the organziation the costing played a vital role if the manager is more efficient of control the cost and develop the extraordinary product to sell in the market with low price will increase the customer base too. It means the costing and the product market are eventually affect each other, as if the product cost increases it is obvious the price will above the cost incurred because the firm has to meet its primary objective. So, for solving the costing matter different costing method has been introduced by the researcher that is effective and controllable the cost base of the company and organization. The managerial accounting is profound with lots of tasks and responsibilities that has been carried out by the management for maintaining the work progress, financial standard, data forecasting and budgetary control. The managerial accountant responsibility is to plan, manage, organize and direct the work and the data that is being useful in work performance. The managerial accountant has further responsibilities of sharing an idea to develop the great financial structure for the company, introducing new technique that has been effective and progressive, the manager also advice the director for the investment purpose and cost control measurement is also introduce by the managerial accountant. In the following assessment we have been considering all the task of the managerial accountant in the base of the cost management and cost measurement by using the technique name job costing. The job costing is one of the methods that has been used for recording costing related to manufacturing jobs, the accountant and the manager usually track the cost incurred in each job for the purpose of the meeting operation and has been incurred in the manufacturing operation. Hence through that the management record all the business and operation that is often implied while operating in the manufacturing job.
Introduction
In the world of competitiveness, the organization has been reasonably thinking about the costing performance and managing the increment in the cost base. Therefore, they are able to serve the community with reasonable price for the product that has been prepare and manufacture by the companies. The management and followed administration have been engage in the working of formulating the plan and organize the material and labour that are reasonable and under the designed cost structure for the company budget. The reasonability will be formed by the utilization of the resource, and quality standard setting. The labour should deliver proper training and task instruction so that the failure will be less and cost structure will be maintained. The organziation and development manager will focus on the process and the departmental framework and choose the costing plan and method as per the analyse result. The costing method that has been viably used in the several organization will be process costing, activity based costing, branch costing, operation costing and job costing etc., In the assessment we have discussed about the job costing and the associated factors that has been used for understanding this costing and also analysed the presence and importance of this costing in the business operation and management controlling of costing. The job costing has been precisely used in the manufacturing industry, it tracks all the expenses and cost and the jobs in relation with the manufacturing jobs. For instance, the job costing will be used for accumulation of the costing with relation to certain project that can be developing of customer machine cost, developing software for the use of research and accounting purpose cost etc. in general the job costing estimate the cost of labour, material and also estimate the overhead cost that is incurred while attaining certain objective. Hence, these are the things in relation with the job costing has been studied and understand in this assessment by implication of practical examples or illustrating the job costing features and uses.
Part A
About Job costing
The job costing system is the system that is has been applied to costing measurement, evaluation and accumulation of the job in the manufacturing jobs. The job costing will help to estimate the direct material and direct labour of the manufacturing department. The overall job has been recording in an order to forecast further cost to help in illustrating the cost for the manufacturing jobs so that it can be measurable and controllable for better processing. Hence, it is helpful in evaluating the final output and accumulation of new project (Kelly and Shoemaker, 2017).
Features of job costing
The job costing system has subsequent feature that has been gathered for understanding more about the job costing are as follows-
Managing manufacturing expense
The job costing and job order costing system has been applied to the manufacturing jobs. The jobs that has been allotted in the manufacturing task has been tracked by the job order costing system for better cost control and operational enhancement. Each job has been delegated with certain cost and expenses that has been transferred to manufacturing accounts of an organization. Hence, one of the features of the job order costing system will be managing the manufacturing job costs (Stone, 2014).
Number allotment to each job
While estimating the job costing of the following operation under the manufacturing jobs. The job order costing sequence the number of each jobs. So that the cost has been ascertain according without any confusion and mistake. The number system also helps in recording all the subject and matter related to particular job in the section of that job it will not intersect in each other jobs.
Step by step costing
The job costing processed in an order that replicate and inform each step in each job and delivered information with the completion of each jobs in the business. This is very efficient feature of the job costing method. As when the task has been subject to be in progress. The job costing manager transfer the job in work in progress section. Hence, it will transfer further for reporting purposes.
Budget estimate and cost up to date illustration
The budget estimation and cost management has been the mere task of the job costing method, with use of the certain budget the job costing method execute its operation for finding the output and incurred unit that has been matched with the budgeted value or not. The budget estimation has been impacting and measure the budget for each job immensely. Later, its eventual help in successful attaining of the desired task as evaluate for the operations (Stone, 2014).
Two organization of Australia that suits the job costing system
The two organziation that has been immensely suitable to use the job costing system will be –
Wesfarmers
Wesfarmers is an Australia based company, the headquarter of the wesfarmers is in Perth, western Australia. The wesfarmers deals in the diversified product that is associated with the safety and industrial product, coal mining product, chemical and retails product in the supermarket store of the company. They have successfully explored their market in the areas of Australia and over employment over 105000 team members. In 2019 the revenue that has been earned by the company is $2792 crore AUD. The wesfarmers is the ASX listed company, the shareholders of the company are approximately 484000. Hence, it is the flourishing retail company of Australia.
Hutchinson Builders
The Hutchinson Builders is an Australia largest privately owned construction company that has been indulge in this business since 1912. It has been found by J Hutchinson. The main aim of this busines is to construct more building with innovation and creation. They are recently engaging in building the cricket Australia and Queensland. Hutchinson Builders has been effectively exploring their business and transforming their standard as per the current need in the construction. With the help of team support and team effective working they have been ranked # revenue ranked 6. The companies come under 500 private owned companies in the IBISWorld’s Top.
Hence, both the firm has been chosen under the job order costing method as in the case of the wesfarmers the are working in the diversified section and each section has been allocated with certain job and manual. So, for tracking each jobs and sectional division of the costing and constructing change in each job with relation to cost will be undermark and help in precise reporting to the top management.
On the other hand, in the case of construction company the job costing has been enabled in the construction company will be construction of direct material, direct labour and overhead expenses or cost that has been incurred in the construction industries (Varajãoto, et al., 2013).
Two potential uses of the cost information for decision-making for selected organization
The two-potential use of cost information for decision with context to selected organziation are as follows-
Better forecasting
In context of both the organization the cost information that has been useful for taking better decision making in both organizations will be the previous information related to each job costing working in the organziation. The job costing help in managing each job report as per the delivered value and the standard. The job costing report that consist of job cost information will help the manager to forecast the costing and budget with relation to each job. The desired project has been undertaken with the use of the job costing information within the organization. The organization manager effectively set the standard with the use of these job costing information. In the project formation and accumulation of the material, labour and overhead expenses will be evaluated and estimated through using such information (Varajãoto, et al., 2013).
Project selection and utilization of the allocated resources
With the use of the cost information the manager of the both the selected firm will help in utilizing the allocated task and resource optimally. The utilization of the resource can be favourably done through accumulating, estimating the favourable result that has been illustrate through accounting the certain information. The project selection and allocation of resource can be done through using the cost information. The cost accumulation and estimation are necessary before selection of the cost and also familiar with the system so that the project will be allocated successfully with the desired output that has been attain after the analysing of the project cost report. Hence, after that the project will be selected and rejected can be done through using the cost estimation report. Hence, these are the two-potential use of the cost information that has been illustrated on the basis of both selected organziation in taking their decision on the purpose of the cost estimation (Debnath, 2012).
Part B
About the selected costing article
The article of the costing is being based on the job costing and activity-based costing method that has been used for cost control and management in the manufacturing firm. In the following article the author has been chosen differentiate example and case for both costing method and using of the method in adoption of certain solution for managing costing in the organziation. The job costing has been described as the process of accumulating cost of material, labour and overhead for specified jobs that has been processed in the organization. The author of this article has been describing that the use of the job costing method will leads to reduce the cost and later it attracts low cost and less taxation by the government (Mulumbi, 2020). The example that has been taken for explaining the job costing in the organziation will be the unilever Kenya and also illustrate the functioning of job costing system in Kenya. The researcher illustrate that Kenya is generally deals in the capital project and the projects that have heavy investment. The certain project that has been produced by Kenya will be renovation project, construction project and infrastructure project. So, for utilizing and estimating the cost information related with this project will be done by the use of the job order costing method. The job order costing method has been eventually used in such project as to estimate specified job cost and direct the instruction as per the costing budget for the certain project. Similarly, the research the case of job costing in Unilever Kenya. In this section the researcher illustrate that Unilever Kenya takes the job costing activities in account to inculcate the job cost and systematic arrangement of each job. The job costing system help in managing large section of job under one head. The distribution, wholesaler and retailer working can be immensely attain by the job costing methods and settle all account significantly. Hence, these are the things that has been extracted from the selected case study (Mulumbi, 2020).
Costing system in the study satisfy the features of job costing
In the following costing article, the job order costing has been discussed significantly with an example of Unilever Kenya. This resonance the working of the job order costing as described in the part A of the question1. The feature of the job costing never change in any constraint. The job costing helps the organziation with the lot of jobs and managing the specified job cost in an order to meet the objective of the firm. The cost management is the essential feature of the job costing activities. In the case of Kenya country, the job costing has been precisely using for structing the job cost as per the project and take appropriate decision based on the analysed cost based on specified project or job (Bragg, 2016). As while selecting the project of infrastructure of a building. The job costing help in estimating the desired job that is required for particular project for completion in a specified time period. the cost estimation based on each task and job has been designated by the job order costing method immensely and steady. Afterward deciding the nature of the job and need of the resource and allocation of resource and work in progress instruction all the work has been done through this costing method. Hence, in the following article the illustrate feature of the job costing has been ascertained effectively in an order to meet the organizational objective (Bragg, 2016).
Usefulness of the cost information to the internal users in the Unilever Kenya
As per the base of the costing article example illustrating the use of the cost information to the internal user of the Unilever Kenya. For constructing the cost information with the help of job costing Unilever Kenya aims at delivering the information to the designed job sector that runs within the organziation in relation to the prevailing cost. The wholesaler will receive the goods at reasonable price can be done through using the job costing methods. The accessibility of the reasonability can be done through using the job order costing system. The cost information has been useful to labour for meeting the target and get the right wage rate regular if the labour has the information of the cost. The material has been charged for correct price if the buyer has the information of the cost prevailing in the market. The manager will control all the cost significantly if the marginal ratio and standard has been fluctuated during the work completion it can be evaluated effectively if the manager has the correct information of the cost and budget for the specified task and job. Hence, with the base of the article information it has been clear that there is the importance of the cost information in the working path of the business for taking desired decision for better result in future (Stone, 2014).
State two key lessons that would inform contemporary organisations about the practical use of your chosen costing system.
Job order costing is useful in managing diversified job cost
The job costing is useful in managing the diversified section of job and its cost estimation within the organziation. The job order costing system is being generally used in the manufacturing business. As the it allocated all the resources significantly in an order to meet the desired objective. It also helps in setting standard within certain jobs and manage the complexes and deliver solution for the certain jobs. As for the future organziation this system has been used as the weapon for controlling and managing the jobs in an order to reduce the cost of the product and access to new segment of market by planning of the costing effectively and specifying the managerial goals and systematic measurement by stating the benchmark (Hasibuan, 2015).
Project all the cost related work effectively and provide information as well
it projects all the job and task effectively and efficiently within the desired time period. The job costing processed in an order that replicate and inform each step in each job and delivered information with the completion of each jobs in the business. This is very efficient feature of the job costing method. The budget estimation and cost management has been the mere task of the job costing method, with use of the certain budget the job costing method execute its operation for finding the output and incurred unit that has been matched with the budgeted value or not. The job costing help in managing each job report as per the delivered value and the standard. The job costing report that consist of job cost information will help the manager to forecast the costing and budget with relation to each job. The utilization of the resource can be favourably done through accumulating, estimating the favourable result that has been illustrate through accounting the certain information. Hence, through this job costing method has been enhancing the function of an organization (Hasibuan, 2015).
Conclusion
The conclusion based on the following study that has been collectively done for understanding the role and feature of job costing method within the organizational functions, cost arrangement and the measurement of the lacking in the performance by each job. The job order costing has been immensely used in the manufacturing, retail, construction organziation. As these firm indulge in varied activities and job task. So, for enhancing the performance of the cost specified for each job the job costing has been comes into existence for better avenue formation and dealing with problem.
References
Bragg, S.M., 2016. Cost accounting fundamentals. Colorado, CO: Accounting Tools.
Debnath, G.C., 2012. Influence of cost accounting techniques on performance improvement: An empirical study on manufacturing organizations in Bangladesh. The Cost & Management, 40(2), pp.22-24.
Hasibuan, E., 2015. Cost Accounting Dalam Perspektif Syariah. JRAB: Jurnal Riset Akuntansi & Bisnis, 14(2).
Hutchinson Builders.,2020, about the company [online] Hutchinson Builders Retereived from https://www.hutchinsonbuilders.com.au/ [accessed on 11 September 2020]
Kelly, M. and Shoemaker, N., 2017. Lumberjack Construction: Job-Order Costing & Manufacturing Simulation. Journal of Accounting and Finance, 17(5).
Mulumbi, A., 2020. JOB COSTING AND ACTIVITY-BASED COSTING AND MANAGEMENT AND COST CONTROL. Retereived from https://www.researchgate.net/publication/338712031_JOB_COSTING_AND_ACTIVITY-BASED_COSTING_AND_MANAGEMENT_AND_COST_CONTROL
Stone, D., 2014, May. Cost Accounting Systems: A Holistic View from the Top. In Proceedings of Global Interdis-ciplinary Business-Economics Advancement Conference (GIBA), Clearwater Beach, Florida, USA (pp. 94-102).
Varajãoto, J., Boté, J., Fernandez-Feijoo, B. and Ruiz, S., 2013. Digital preservation cost: a cost accounting approach. The Learning Organization.
Wesfarmers.,2020 about company [online] Wesfarmers Retereived from https://www.wesfarmers.com.au/[accessed on 11 September 2020]