We all start businesses because they give us back profit and we enjoy it. Job costing timesheet is the most effective way to ensure your business makes you the profit that you are seeking. Every type of business can benefit from the job costing by ensuring that all the estimates cover all your business requirements from supplies to employee labor plus overhead costs. By using job costing it saves a lot of money ensuring that you make some hard earned profit.
Components of Job Costing
- Fixed fee jobs – This is an agreement to complete a certain job for a set price for your customer no matter the costs incurred. The deal may seem such a good one to a customer not knowing the estimation for the set price will be high enough to cover any incurred contingencies resulting to a higher fixed price.
- Time and materials job – During this module, the cost of materials and labor are all passed to the customer with markup for overhead costs and profit built in as a percentage for each item. Time and materials are preferred by the sellers as unforeseen costs may be passed on to the customer and covered well with the amount charged.
- Proposals/Quotes – These are prepared to give an estimate of predictable costs before a job is awarded. Proposals also provide a way to track costs even as the job progresses so that they don't exceed the budgeted costs. They do not in any way affect your general ledger or financial statements as they are only projections.
- Revenues – This is a critical module to the life of any business. Revenues are not only considered by customers but also by job, account and item. When you think of items as a subcategory of revenue then it creates a new way to analyze the costs incurred in producing a certain revenue. Expenses are quoted as revenues and passed on to the customer as revenues.
- Direct costs – These are the costs of products and services that are sold. They are easily distinguished from the overhead and indirect costs. They are categorized as goods sold on the profit and loss report
- Items – These are the services or goods that your business sells. As many items as you may have to enter, make sure you enter them on the right categories to in your accounts. Items helps you focus on labor and non-inventory items for materials.
- Standard costs – They symbolize direct costs that contain a calculated share of interrelated costs not allocated separately to your clients. They are calculated separately to give a more accurate figure of the direct costs incurred.