A level-readyAll subjects · Accounting · WAC11 The Accounting System and Costing
Job costing and batch costing
Edexcel IAL Accounting · WAC11 The Accounting System and Costing
Job costing finds the cost of a single customer order; batch costing finds the cost of a group of identical items made together. Both build up direct costs and absorbed overheads (spec 1.4.12 and 1.4.13).
Characteristics of job costing
- Work is done to a customer's specification: each job is different (a printing order, a repair, a custom kitchen).
- Each job has its own job number and job cost sheet.
- Costs are collected separately for each job: direct materials (from requisitions), direct labour (from time sheets), direct expenses, then overheads absorbed using departmental OARs.
- The total cost is used to set a price (cost plus a mark-up, or to give a target margin) and to check profitability after completion.
Job cost sheet
| Job 207 | £ |
|---|---|
| Direct materials | 1,850 |
| Direct labour: Machining 14 h x £15 | 210 |
| Direct labour: Assembly 20 h x £12 | 240 |
| Direct expenses (special tool hire) | 150 |
| Prime cost | 2,450 |
| Overheads: Machining 10 machine hours x £18 | 180 |
| Overheads: Assembly 20 labour hours x £9 | 180 |
| Total cost | 2,810 |
| Profit (25% mark-up on cost) | 702.50 |
| Price | 3,512.50 |
Batch costing
A batch is a number of identical units made together (500 loaves, 2,000 printed leaflets). The batch is costed like a job, including set-up costs for the batch, then:
cost per unit = total batch cost / number of good units in the batch.
Larger batches spread set-up costs over more units, lowering unit cost, but tie up money in inventory.
Worked example
A batch of 400 units uses materials £3,200, direct labour £2,400 for 160 hours, overheads at £9 per labour hour and set-up costs of £360. Find the cost per unit.
- Overheads = 160 x 9 = 1,440.
- Total = 3,200 + 2,400 + 1,440 + 360 = 7,400.
Answer: Cost per unit = 7,400 / 400 = £18.50.
Check yourself
- A job uses materials £640, 12 labour hours at £14 and 5 machine hours. Overheads are absorbed at £22 per machine hour. Calculate the total cost of the job.
Show answer
£918. 640 + 168 + 110 = 918.
- A job costs £2,810. The business prices jobs to give a 20% margin on the selling price. Calculate the price.
Show answer
£3512.50. Cost is 80% of price: 2,810 / 0.8 = 3,512.50. (A 20% margin is the same as a 25% mark-up.)
- A batch of 1,200 units costs £5,100 including set-up. Calculate the cost per unit.
Show answer
£4.25. 5,100 / 1,200 = £4.25.
- Set-up costs are £600 per batch and other costs £3 per unit. Calculate the cost per unit for a batch of 300 units.
Show answer
£5.00. (600 + 900) / 300 = £5.00.
- Which business is most likely to use job costing?
- An oil refinery
- A bakery making thousands of identical loaves continuously
- A water supply company
- A firm that builds custom kitchens to each customer's design
Show answer
A firm that builds custom kitchens to each customer's design. Each kitchen is a separate, different job.
- Which document records the direct labour time spent on a job?
- Materials requisition
- Time sheet (job card)
- Purchase invoice
- Credit note
Show answer
Time sheet (job card). Workers record hours against each job number.
Sources
Last updated 8 November 2026. Spotted a mistake? Tell us.