Managerial Accounting: Job Costing System and its Implementation

This article discusses the core concepts of managerial accounting and focuses on the implementation of job costing system in organizations. It explains the features of job costing system and how it is useful in providing cost information to internal users. The article also includes case studies of two Australian companies that use job costing system.

Managerial Accounting

EXECUTIVE SUMMARY
This article outlines the core management accounting definition and the managers' value to
management concepts in internal organisations such that substantive decisions are taken in the
necessary period. The study also provides a structured guide to job costing that lets employers
assign individual expenses for particular jobs within and running it. For this reason, it outlines
the rationale for the use of method costing in industries in various fields. Two main guidelines
are provided that are important for businesses if they wish to implement the value of operations
in real life.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
PART A..................................................................................................................................4
PART B............................................................................................................................................6
1. On the basis of journal article, summarising the costing mechanism designed and its
implementation:......................................................................................................................6
2. Based on your chosen costing article, did the costing system in the study satisfy the features
discussed in Part A (Q1)? Why or why not?..........................................................................7
Q3 Based on your chosen costing article, how useful was the cost information to the internal
users in the organisation? Discuss with examples from your costing article.........................8
Q4 Based on your literature findings, state two key lessons that would inform contemporary
organisations about the practical use of your chosen costing system..................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Managerial analysis is the practice of classifying, calculating, evaluating, evaluating and
passing on financial statements to managers to enhance an entity's goal. It varies in financial
statements as this has to do with helping internal management to make extremely poorly-
educated business decisions within the company. Analysis of the data in MA could be adapted to
address the different requirement of all end-users (Argade, 2020). It covers various many
accounting facets, like commodity cost accounting, budgeting, forecasting and various financial
analysis. In this article, the value of MA with Job Costing system has been chosen for better
understanding and different aspects of project are covered.
Part A addresses aspects of Job Costing, 2 Australian companies that use costing system. In
comparison, a real-life company using the same costing method is also built with the aid of
journal paper.
MAIN BODY
PART A
Features of Job costing system
1. Costs are accrued separately for each job, as the products are made mainly against the
customer's demand and therefore not to retain stock by disposal.
2. Job costing method joins the special costing form of order, as each job is differentiated
from another. The reason seemed to be that the standard varied through one customer to
another.
3. The costs for a job are recorded and reported separately, as not all workers are distributed
through multiple functional domains.
4. Planning in order to precede dependent on the quantity of workers working at any
particular time. A separate record of the job is kept in ahead of time for each role.
5. If a job needs a great deal of finishing processes, job bookings can be made to learn the
finalisation of its mission.
6. The key objective of the true cost is to describe specific gains or expenses between each
job (Cooper, 2017).
The cost of employment can be separated into two categories, including the value of factory
employees and the expense of the deals. If a process is finished on a micro level, the costing

method is taken for the production jobs (Argade, 2020). The agreement-costing method is
introduced when a large job is complete.
2 particular Australian companies using Job system
Incitec Pivot: this is among the Australia's largest chemical processing firms that
implement job costing in every financial accounting to incorporate task costing method. This
method lets such an organisation enforce work order expenses as a means to control its use of
raw resources, processing equipment and working hours. This company assumes that each buyer
purchases a particular job for the cost of project tasks. In particular, Inditec pivot management
may combine lower-value projects under a single contractor that work together to make simple
decisions also at end of fiscal year or time.
CPB Contractors: Perceived to be among Australia's biggest construction firms with
such a total value of $700 Million. Management team often used promote the implementation of
a job order tool that supports to organise a variety of ingredients, from workers to various
materials and tools. Identifying the basic cost of approximately all of the materials for specific
jobs is perhaps satisfying. Costing methods in construction management generate various
workers mainly on-the-job as well as reliable bookkeeping. Besides, job costing could be
especially helpful in keeping track of their overall personal expenses.
Potential cost information utilisation
The pricing system should be designed to deliver comprehensive, high-level information
that promotes planning, monitoring, and creative planning, focused on the price of products,
processes, and functions. The decision-making system is an operation carried out in institutions
at all levels, incorporating long-term and short-term views. The ideas are prompted by the
assessment, so that in way to attain valid conclusions, financial or empirical studies are needed
for a large number of choices (Maliki and Rukmana, 2020). The investment management career
is deeply interested in decision-making systems for these reasons. The management response
would rely on expenses involved that are known by their predictive features that include
additional costs, real benefits, and also related expenses even within specific programs of both
firms (Incitec Pivot, CPB Contractors). The management reports are usually given the
information regarding spending that is considered acceptable. Getting reliable, detailed, concrete
information and in perfect manner is, in other terms, an important element in decision making.

PART B
1. On the basis of journal article, summarising the costing mechanism designed and its
implementation:
In administrative accounting provessesses of many soft drinks or liquor producing company like
Coca Cola, the institutional process of costing and budgetary regulation prevails. In the
globalised market climate, the industries engaged in alcohol or liquor production are growing
exponentially. The automotive companies have many branches in numerous clients in different
nations with incentive to embrace globalisation alongside cost management. While the
development of manufacturing sectors internationally was dictated by many physical, social as
well as cultural dimensions of the foreign market. These organisations' management is able to
implement improvements in the function and operating system with the intention of gaining the
market edge in the changing business environment. The aim of costing system and its strategies
such as job costing is to assess the aspect of a business's revenues by monitoring and reducing
operating costs. The costing system mechanism involves many methods such as activity-based
costing, cost accounting, batch costing, etc. that are being used by diverse corporate groups in
conjunction with about their market research, specific process and line of products. Several other
techniques such as packet costing as well as activity-based costing method which are used
internationally by very few commercial enterprises however these technologies can be used in
many conceptual approaches. The introduction of systematised administrative costing systems
contributes to labour productivity evaluation and encouragement for costing strategies
application (Triyono, Setiawan and PRATAMA, 2018).
There are many subgroups of costing methodology throughout the company entity's
management platform for directing and maintaining the range of different object's operational
works with sufficient traditional costing system for the effective integration of the methods.
Under a corporate enterprise like Coca Cola, specialisation or departmentalisation relies on
distinction in conjunction with the duties and responsibility of the work. Operational operations
consist of several types of expenses involved when the execution of certain production projects
and categorization of those costs often form part including the costing process. The company
such as Coca Cola uses the various costing methods for selling goods and services, forecasting
potential cash inflows, and monitoring ads, packaging, and cost of delivery. In addition, device
design strategies helps to minimise pay-back times and to assess rates of return. By breaching the

accounting principles of prudence and continuity, it involves adjusting accounting practises or
costing strategies impacting the performance of the corporate organisation. Thus the, the costing
strategy such as work order costing is useful in monitoring the costs and handles the effective
consequences of adjustments within the enterprise to handle various forms of company
operations behaviour. In the costing methodology of job ordering, the cost paper and financial
statement differentiate the expense in many sections such as direct, secondary, constant or
variable etc. Both this assists in working out even the benefit before variable effects and also the
actual profit still measurable after subtracting the financial costs (Ma'rifati, 2013). All this allows
the manager in cost-effective and time-effective control of various areas of activities.
Consequently, there should be nothing wrong with thinking that "the powerful costing process
contributes to sustainability and achievement of goals."
2. Based on your chosen costing article, did the costing system in the study satisfy the features
discussed in Part A (Q1)? Why or why not?
Definition of the costing process areas and levels mentioned above together with the
systematic appraisal of the paper, it is indicated that expected to cost institutionalised
methodology is built with the goal of monitoring and handling costs alongside meeting the
business institution demands. Costing method implemented underneath the employee's
management functions, such as Coca Cola, to handle and transfer various costs in conjunction
with job responsibilities (resulting from the application of the costing method for job orders). It
is useful for managing risk of transparency (Ma'rifati, 2013). The expense process and its
measurement are critical for assessing the benefit as well as improving the quality of
organisational operations in the strategic management of that same company. In contemplating
the Coca Cola situation it is appropriate that costing processes and strategies such as costing
work orders and organisational costing allow management to concentrate on handling actual
inventory, labour, raw material, etc. costs. Costing method is useful in monitoring and analysing
the everyday use of expenditures by multiple businesses. This report has soda or soft drinks
producing business such as Coca Cola similar models.
Costs are defined or listed by task: This includes adequately consistently monitoring marketing
resources and evaluating costing methods. There are different types of costs in this sector that are
correlated with raw material, labour, etc. as well as this has to be properly regulated for a

successful company. There are various types of expenses relating to various organisation
operations.
Indirect and also direct expenses are also categorised – there have been separate businesses
that are associated with these expenses when maintaining the operations. This expense is linked
to the development of sugary beverages and their management enables the business boost the
effectiveness of money. All of this assists with the estimation of overhead expenses together with
the analysis of variable costs as well as the detection of overheads exists in various allocated
occupations or employment.
Stock availability as per demand- This is regarded as the approach that allows firms to
efficiently control their activities. It might help to assess the quantity of manufactured Coca Cola
bottles and cans to achieve the objectives. All of this results in productive retail production of
products and in sustaining the steady selling cost of commodity. Supply in the sense of ideal
price ceiling must be about demand.
Allows managing the optimal inventory system:
In using influential, management functions and costing strategies aims to organize the
appropriate amount to keep inventory. Also, it proposes inventory control system for FIFO. Both
underneath the costing system and its methods, costs of war households and processing fees are
assessed.
Q3 Based on your chosen costing article, how useful was the cost information to the internal
users in the organisation? Discuss with examples from your costing article.
Job costing is described as the cost approach being used by industries in which revenue is
calculated in the form of a job role performed. Coca-Cola is selected in this situation and this
organisation can also choose in-company work costs to handle the expectations and demands for
successful implementation (Pagare, 2020). There are separate expenses collected for a task or for
a project schedule in this price. Whenever the expense is often used in Coca-Cola, development
will take place against consumer orders not really for supply. It will allow the business to control
product expenses and provide consumers with the correct quantity of drinks. Throughout this
way, ideas influenced risks can be saved and the income made will be increased. This can be
described as a result that although the price for work is to manufacture 500 bottles of coca cola
then it could be packed and communicated to the offer or easily. The cost of production would be
minimised within Coca-Cola the various cost components involve direct material, working

capital and gross spending. Both are paid separately from the jobs in question as well as the fixed
costs for the job becomes more of the compensation are usually. As cost management is applied
in coca cola many of the records are accuracy and reliability.
If Coca-Cola takes advantage of any task now it will inevitably result in improved business
benefit (Pollard, 2018). In addition, it would be convenient for managers to predict work costs
based on past reports. The real cost of pending work is measured until the task is already
finished. There are suddenly increases rates that are voluntarily calculated budget allocation
provided by coca cola business reporting. By using Job costing, everything becomes simpler for
administrators of manufacturing and financing to realise which fields incur higher costs than
which ones do not. Mainly, this expenditure reflects on grappling with certain costs that exist on
a regular basis including in the above-mentioned British iron and steel industries, different forms
of costs grow in relation to raw content, labour and much more. With the aid of this costing
method, monitoring the everyday use of the amount of losses and expenditures becomes possible
for the above businesses and sectors. Having considered important historical knowledge, it aims
to sort out the differences when contrasting real costs with expected costs. Decisions relating to
expenditure are to be made after knowing the cost details. Choose investment that needs less
expense, with more gain and much less cost incurred. Below is a thorough overview of the value
of expense data for internal consumers as follows:
1. Management: The planning of strategic goals and objectives is made simpler for
administrators by presenting accurate expense details on the various operations. This
becomes feasible when they can reflect on certain tasks that incur higher expenses, and
can make schedules accordingly. This knowledge is ultimately more valuable to finance
managers, rather than management teams. That is even though they have a larger
obligation to manage their expenditures (Horngren, Datar and Rajan, 2015).
2. Directors: In relation to administrators, administrators should also receive crucial expense
information which can be used to determine the financial context efficiency of the
business (About costing and budgetary management in the British iron and steel industry,
2020). This is since, in process costing, cost-related information for and factor is given in
a structured way that directors may use to figure out factors when contrasting with real
expense.

Q4 Based on your literature findings, state two key lessons that would inform contemporary
organisations about the practical use of your chosen costing system.
Costing method for work orders gives support to Coca-Cola business to provide advantages in
various fields. The variants also aid in the management of employee efficiency metrics and
providing correct production data of various activities performed in the process of removing.
Indirect calculation of the costs is often well handled. Costs are therefore efficiently tracked
within development processes (Huikko, 2015). A costing mechanism for work orders provides
Coca-Cola with aid in providing a reliable tool that would be used to measure the costs the
business needs. This costing method is useful for this business to collect accurate knowledge
about the expense of production and save it from making informed choices on whether or not to
manufacture the individual product. It also helps with allocating expenses independently for two
related business activities. It improves profit margin estimation and could be used to get correct
assessment of each service. Managing the purchase of goods and materials that can be treated is
useful in purchasing price adjustments and in collecting information on production activities. A
costing framework for work ordering offers Coca-Cola with aid in measuring employee
efficiency.
Throughout this manner the Coca-Cola management assess the employee production in
terms of quality, competitiveness and controlling costs. This device also helps in the estimation
of the varying costs suffered by the organisation when working out separate work. Various
techniques and plantations can be built which can be used in advance to manage costs and
perform successful operations. For Coca-Cola this form of costing approach is versatile and can
help to accurately quantify indirect costs such as overhead and production. For Coca-Cola, this
costs approach is useful in estimating costs in case of various situations. This approach but also
offers consistency in the accounting of various forms of costs associated with promotion,
distribution, and expenditures for the duration. If Coca-Cola needs to produce a highly flexible
approach, then this strategy is useful in handling multiple processing processes. Job costing lets
Coca-Cola easily analyse manufacturing processes and identify possible complications that can
contribute to two negative effects on operations. Please offer Coca-Cola support when
introducing a good business benefit approach. Job order costs are helpful to Coca-Cola when
consumers have various processes and activities involved in producing the finished product.

Coca-Cola estimated overhead rate based on projections and real overhead expenses sustained by
the organization the next year.
Flow assessment of specific units: It's really necessary for the above-mentioned organisations to
determine the stream of total products if they intend to apply the costing mechanism in real life.
This is important because it becomes possible for accountants to efficiently execute costing
system by using reliable information about the system flow generated.
Recognition of overall costs: It's also an essential topic to be learned by the businesses listed
above. It is correlated with the identification of the overall number of expenses that has arisen in
different mechanism and operation types. By doing so, administrators would be able to adjust
project costs better. This is so since overall expense can provide an analysis of the output of the
organisation and can be classified accordingly mostly on grounds of this expense of different
activities (Fisher and Krumwiede, 2015).
CONCLUSION
It is studied from the above topic that work costing is an efficient approach that can be used
by multiple companies to reduce the expense of holding stock of goods. There are plenty of
savings for the business when using this form of pricing. Business companies use the labour
costing approach to calculate expenses depending on a particular project or task. There is a cost
estimation method by adding inventory, labour and operating costs.

REFERENCES
Books and Journals
Argade, S. L., 2020. Job Costing.
Argade, S. L., 2020. Contract Costing: Meaning, Definitions, Contract Costing concepts.
Pagare, S., 2020. Chapter-1: Basics of Cost Accounting-MCQ.
Fisher, J. G. and Krumwiede, K., 2015. Product costing systems: finding the right
approach. Journal of Corporate Accounting & Finance, 26(4), pp.13-21.
Huikko, A., 2015. A job costing tool for construction company X.
Horngren, C. T., Datar, S. M. and Rajan, M. V., 2015. Cost accounting: A managerial emphasis.
Pollard, W. B., 2018. An Active Learning Approach to Teaching Job-Order
Costing. Management Accounting Quarterly, 19(4), pp.10-10.
Cooper, R., 2017. Target costing and value engineering. Routledge.
Maliki, A. and Rukmana, H. S., 2020. Calculation of Cost of Production Using the Job Order
Costing Method Against Determination of Selling Prices at PT OTO Media
Kreasi. Neraca: Jurnal Akuntansi Terapan, 1(2), pp.103-125.
Triyono, D., Setiawan, A. and PRATAMA, S. E., 2018. The Fabrication of Main Cost
Application Production with Job Order Costing Method at Tape Company in
Sidoarjo (Doctoral dissertation, Petra Christian University).
Ma'rifati, I. S., 2013. Sistem Informasi Akuntansi Biaya Job Order Costing Untuk Usaha
Kecil. EVOLUSI: Jurnal Sains dan Manajemen, 1(1).
Online
Job costing system. 2008. [Online] Availabe Through:
<https://file.globalacademicresearch.com/projectfiles/internal_ordr_document/
moam_1599914362.pdf>.