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Difference Between Job Costing and Operating Costing

Job costing and operating costing are two methods of costing. Job costing is used when production is done according to specific customer orders and specifications. Costs are separately calculated and recorded for each individual job. Operating costing is used by organizations that provide services rather than manufacturing physical products. It involves calculating the cost of providing services per unit like per passenger, per bed, or per student. Cost units vary depending on the type of service provided.

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3K views1 page

Difference Between Job Costing and Operating Costing

Job costing and operating costing are two methods of costing. Job costing is used when production is done according to specific customer orders and specifications. Costs are separately calculated and recorded for each individual job. Operating costing is used by organizations that provide services rather than manufacturing physical products. It involves calculating the cost of providing services per unit like per passenger, per bed, or per student. Cost units vary depending on the type of service provided.

Uploaded by

shraddhamal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Difference between Job costing and operating costing

JOB COSTING 1) Job costing is one of the methods Of costing 2 methods of costing, a)job costing b) process costing 2) Job costing is used in those business concerns where production is carried out as per specific order and customer specifications. 3) In job costing each job (or product) is separate and different from the other jobs or products. 4) Job order system is used by manufacturing concerns where an order is produced to a customers specification such as building, contracting, furniture and general engineering. 5) Unit costs are computed by job on the job cost sheet.

OPERATING COSTING Operating costing is one of the variants of process costing. It is also known as service costing

Operating costing is of cost of services. The calculation of cost of service rendered in the form of price is known as operating costing In operating costing service is continuous in nature. Each cost is necessary to calculate in order to find out per person cost, per km, per meal Operating costing method is used by those organisations which render services and do not manufacture any physical item, such as transport, power house, hospital

The cost units are usually applied in different service undertaking but the units are passenger-mile, tonne-mile, a bed in hospital, per student in college. 6) In job costing costs are recorded On the other side, cost units differ among separately for the ascertainment of the service organisations depending upon the cost of the work done on each the nature of service being rendered. order. 7) Following are some of the For the calculation of operating cost we important costs which are need to need to consider following costs be considered while calculating a) Maintenance charges/ costs job costing b) Running cost a) Direct labour cost c) Fixed charges/ standing charges b) Cost of material c) Fixed cost d) Other variable overheads 8) It helps for preparation of It helps to determine the cost of operating quotation for different jobs and its services from a management control also helps for preparing of budget and management information point of for the future view.

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