Difference between Job costing and operating costing
JOB COSTING OPERATING COSTING
1) Job costing is one of the methods Operating costing is one of the variants of Of costing process costing. It is also known as 2 methods of costing, “service costing” a)job costing b) process costing
2) Job costing is used in those Operating costing is of cost of services.
business concerns where The calculation of cost of service production is carried out as per rendered in the form of price is known as specific order and customer “operating costing” specifications. 3) In job costing each job (or In operating costing service is continuous product) is separate and different in nature. Each cost is necessary to from the other jobs or products. calculate in order to find out per person cost, per km, per meal 4) Job order system is used by Operating costing method is used by manufacturing concerns where an those organisations which render services order is produced to a customer’s and do not manufacture any physical specification such as building, item, such as transport, power house, contracting, furniture and general hospital engineering. 5) Unit costs are computed by job on The cost units are usually applied in the job cost sheet. 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.