Question

Based on your literature findings, state two key lessons that would inform contemporary organisations about the practical use of your chosen costing system. (Job costing)

Answer 1

Two key lessons that would inform contemporary organizations about the practical use of job costing system are:

1. Using job costing system contemporary organizations will be able to establish a basis with regards to estimation of costs of similar jobs that the organizations will undertake in future.
2. It will help contemporary organizations to get a detailed analysis with regards to cost of material, labor and overheads for each job as and when required.

These two key lessons highlight the primary practical aspects of using job costing for contemporary organizations. As consumers are becoming more demanding contemporary organizations are providing more and more customized level of offerings to their customers and hence use of job costing will be more suitable for them. For example companies like Levis are offering customized denims and jeans for customers in which buyers can login to the company’s website and customize the design for their own jeans. In such a situation use of job costing will be the practical solution for the company and will help it to best capture its costs.