Home > Accounting Glossary > Job Costing
Job Costing: Definition and Meaning
Definition
Job costing is a method of assigning and tracking costs by individual job, project, contract, or customer engagement.
Why It Matters
For construction companies, job costing can help management understand project profitability, compare actual costs with estimates, identify cost overruns, improve future estimating, and support work-in-progress reporting. It may include direct labor, materials, subcontractors, equipment, permits, and other costs assigned to a specific project.
Job costing is most useful when information is timely, codes are applied consistently, and project-management and accounting systems communicate effectively.
Example
A contractor assigns labor hours, material purchases, subcontractor invoices, and equipment costs to a specific project to evaluate that job’s profitability.
Related Terms
TYS provides accounting, tax, construction-accounting, and business-advisory support to closely held businesses, contractors, individuals, and families. With offices in Fairport, New York, and Walnut Creek, California, TYS helps clients better understand their financial information and prepare for important decisions.
Have a question about Job Costing or your business’s financial reporting?
Contact TYSThe information on this page is provided for general educational purposes only and is not accounting, tax, legal, financial, insurance, bonding, or business advice. Consult qualified professionals regarding your particular circumstances.
Back to the Accounting Glossary →