Job Costing and Batch Costing are two types of production costs that are calculated as per the data available in each type of company. And job costing is considered to be a modified version of batch costing. Both job costing and batch costing are two important elements of the production department that give the company clear data on products. The detailed difference is discussed below in a table.
Key Takeaways
- Job costing calculates costs for individual, unique projects, while batch costing focuses on groups of similar products.
- Job costing applies to custom orders and services, while batch costing is used in mass production.
- Batch costing simplifies cost calculations using an average cost per unit, while job costing requires precise cost tracking for each job.
Job Costing vs Batch Costing
The difference between job costing and batch costing is that the definitions of both costings are different, giving the main difference between them. Job costing refers to the cost that is calculated with the help of the total number of jobs, contracts, or work orders of a company. On the other hand, batch costing refers to the cost that is calculated with the help of calculating the cost of each batch of products that are manufactured. Since we know that job costing is only the advanced version of batch costing, it almost means the same thing, but its method of calculating is different.
Job costing is the cost calculated with the help of the total number of products per the customer’s demand. The job coatings are taken into consideration as per the customer’s demand. Job costing is a new concept that has been implemented in the production service and is new because it is the advanced version of batch costing.
On the other hand, Batch costing refers to the cost that is calculated with the help of calculating the cost of each batch of products that are being manufactured. The batch costing is taken into consideration as per the sum of the total production in the form of batches. Batch costing is comparatively an old concept that has been used in companies for many years.
Comparison Table
| Parameters of Comparison | Job Costing | Batch Costing |
|---|---|---|
| Definition | The production of products according to the customer’s demands and the method that is used to calculate this production costing is known as job costing. | The production of products when calculated in a specific unit or batch and further the cost is determined is termed to be batch costing. |
| Concept Duration | Job costing is a new concept that was introduced as an advanced method of batch costing. | Batch costing is comparatively an old concept and has been introduced many years ago. |
| Production | The manufacture of the products in a job costing method is determined as per the customer’s demand. | The manufacture of the products in a batch costing is determined in big units. |
| Ideal Industries | Job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. | Batch costing is helpful for those small industries that produce or manufacture products as per the batches. |
| Calculation | Job costing is the method that is used to calculate daily. | Batch costing is the method that is used to calculate it weekly or monthly. |
| Advantages | The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. | The advantages of batch costing are that the labor cost is decreased and hence the final price of the product is lowered, the production activity is faster, it is very useful for the smaller businesses, etc. |
| Disadvantages | The disadvantages of job costing include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. | The disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working then it affects the whole batch of products as it delays the production. |
| Example | Examples of job costing products include things such as a customized shoe, dress, jewelry, etc. | Examples of batch costing products include things such as garments, TVs, refrigerators, mobiles, etc. |
What is Job Costing?
The cost method that is determined according to the customer’s demand or choice is called Job Costing. Job costing is the advanced version of batch costing, which determines the value of each product sold or consumed by the other person. The manufacture of the products in a job costing method is determined as per the customer’s demand. That means each product determines the job costing of the industries. Also, Job Costing includes various types of processes, and that process includes things such as Receiving Enquiries, Estimating Prices, Receiving Client Orders, Producing the Order, Execution and Inspection, and the delivery of the product. Without these processes, job costing can not be estimated; hence, these are important aspects of Job Costing.
Some particular industries use the job costing method solely to determine their requirements. Hence, job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. Job costing is the method that is used to calculate daily production. This is because of the main motive of the costing, as we know, this costing is individually determined, and therefore it can be calculated daily.
There are pros and cons for everything; therefore, the job costing method has pros and cons. The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. And its disadvantages include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. There are many examples of job costing, and they are things such as customized shoes, dresses, jewelry, etc.
What is Batch Costing?
The industries that calculate the production costing into a particular batch of products and this method is known as batch costing. In short, the production is collectively calculated into units. Batch costing can be termed be an old concept that has been used for many years now. And further, for more specific distinction, batch costing was improvised into job costing. As we know, batch costing is determined based on the manufacture of the products in bigger units. And therefore, it is required to give detailed specifications for each product in a particular batch.
Batch costing is the method that is used required to be calculated weekly or monthly. As we know, it is counted in units, therefore the industries need to wait for the accomplishment of manufacturing each batch so that it is convenient to count on. Some examples of batch-costing products include things such as garments, TVs, refrigerators, mobiles, etc. These things are included in batch costing because these items are manufactured in the same specific design, logo, model usage, etc. Therefore, the items look alike.
Some advantages and disadvantages of job costing and batch costing are that the labor cost is decreased and hence the final price of the product is lowered, and the production activity is faster, it is very useful for smaller businesses, etc. And the disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working, then it affects the whole batch of products as it delays production.
Main Differences Between Job Costing and Batch Costing
- The production of products according to the customer’s demands and the method that is used to calculate this production costing is known as job costing. On the other hand, the production of products, when calculated in a specific unit or batch and further the cost is determined, is termed to be batch costing.
- Job costing is a new concept that was introduced as an advanced method of batch costing. On the other hand, Batch costing is comparatively an old concept and was introduced many years ago.
- The manufacture of the products in a job costing method is determined as per the customer’s demand. On the other hand, the manufacture of the products in batch costing is determined in big units.
- Job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. On the other hand, Batch costing is helpful for those small industries that produce or manufacture products as per the batches.
- Job costing is the method that is used to calculate daily. On the other hand, Batch costing is the method that is used to calculate it weekly or monthly.
- The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. On the other hand, the advantages of batch costing are that the labor cost is decreased and hence the final price of the product is lowered, and the production activity is faster, it is very useful for smaller businesses, etc.
- The disadvantages of job costing include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. On the other hand, the disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working, then it affects the whole batch of products as it delays production.
- Examples of job-costing products include things such as customized shoes, dresses, jewelry, etc. On the other hand, examples of batch-costing products include things such as garments, TVs, refrigerators, mobiles, etc.
- https://link.springer.com/chapter/10.1007/978-1-349-19930-3_8
- https://link.springer.com/chapter/10.1007/978-1-349-90655-0_8
Last Updated : 13 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
This article is a very comprehensive one. It has clearly explained the concept of job costing and batch costing and has provided a detailed comparison between the two. It’s very helpful.
The detailed explanation of the processes involved in job costing offers valuable insights into how these costings are determined. It’s an informative read for those interested in production costs.
I appreciate the in-depth explanation of the advantages and disadvantages of both job costing and batch costing. This article provides a clear understanding of the importance of these costing methods in different industries.
The examples provided for both job costing and batch costing help illustrate the practical application of these concepts. It enhances the reader’s understanding of the topic.
The detailed comparison table is a helpful tool to understand the differences between job costing and batch costing. It provides a clear breakdown of the parameters of comparison and makes it easier to comprehend.
The article’s clear description of job costing and batch costing adds a lot of value to the understanding of these concepts. It’s well-explained and thoroughly researched.
The article makes it clear that job costing applies to custom orders and services while batch costing is used in mass production. It’s interesting to learn about how production costs are calculated based on the different types of production.
The explanations of job costing and batch costing are comprehensive and detailed. The article effectively highlights the significance of these methods in various industries.