ECONOMICS

Detailed explanation-1: -If the job is accepted, a Production Order is made by the Planning Department. It is in the form of instructions issued to the foreman to proceed with the manufacture of the product.

Detailed explanation-2: -In summary, the basic characteristics of job order costing are: (a) Comprises of products or services that are different from each other. (b) Costs are pooled according to the job. (c) Unit cost is calculated by dividing the total job cost with the unit produced for that particular job.

Detailed explanation-3: -A business that applies costing method usually has the following characteristics: Production is carried out based on the customer’s specification. Products are manufactured in distinguishable lots. Products produced are of not uniform nature.

Detailed explanation-4: -Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculate the cost for doing an individual job.