Question

Is job-order costing as applicable to service companies as it is to manufacturing companies? If so, give an example of a service company that might use job-order costing and explain how the company uses this costing method.

Answer 1

job costing is a method used in case the cost is particular to the said product or service. It is a cost calculation technique in which we accordingly charge the said service or product separately. this technique will be generally used if the product is customized. In case of a service sector, it is used to find the cost to be allocated to the said job or service rendered to the customer. In the service sector, there is a huge need for customization in the jobs like some may only need little time o yours but for the other person it may take a long time to complete the job, so job costing is an important part in the service sector

examples of service sectors which require job costing are accounting firms, law firms, hospitals etc.

The service sector company will charge according to the time taken by the job/service any other cost involved in the process the degree of complexity etc..

it is as same as the manufacturing companies but in the case, the main cost will be the time utilized by the service provider in the said job