Job-Order Costing in Service Companies

Job-Order Costing in Service Companies - McGraw-Hill's...

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Unformatted text preview: McGraw-Hill's Connect - Ebook 9/11/09 7:22 PM Managerial Accounting EBook 13/e Content Chapter3: Systems Design: Job-Order Costing Job-Order Costing in Service Companies Job-order costing is used in service organizations such as law firms, movie studios, hospitals, and repair shops, as well as in manufacturing companies. In a law firm, for example, each client is a "job," and the costs of that job are accumulated day by day on a job cost sheet as the client's case is handled by the firm. Legal forms and similar inputs represent the direct materials for the job; the time expended by attorneys is like direct labor; and the costs of secretaries and legal aids, rent, depreciation, and so forth, represent the overhead. p. 114 In a movie studio such as Columbia Pictures, each film produced by the studio is a "job," and costs of direct materials (costumes, props, film, etc.) and direct labor (actors, directors, and extras) are charged to each film's job cost sheet. A share of the studio's overhead costs, such as utilities, depreciation of equipment, wages of maintenance workers, and so forth, is also charged to each film. In sum, job-order costing is a versatile and widely used costing method that may be encountered in virtually any organization that provides diverse products or services. IN BUSINESS MANAGING JOB COSTS IN A SERVICE BUSINESS IBM has created a software program called Professional Marketplace to match IBM employees with client needs. "Using Marketplace, IBM consultants working for customers can search through 100 job classifications and 10,000 skills, figuring out who inside IBM is available, where they are located and roughly how much it costs the company to use them." Thus far, the results have been encouraging. IBM has reduced its reliance on outside contractors by 5% to 7% and its consultants spend more of their time in billable work. Furthermore, IBM's senior consultants can search across the globe for available employees with particular niche skills with the click of a mouse instead of having to rely on numerous time-consuming phone calls and emails. Page 1 of 2 McGraw-Hill's Connect - Ebook 9/11/09 7:22 PM Source: Charles Forelle, "IBM Tool Deploys Employees Efficiently," The Wall Street Journal, July 14, 2005, p. B3. 2010 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Page 2 of 2 ...
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This note was uploaded on 09/18/2009 for the course ACC 3023 taught by Professor Dennislopez during the Spring '09 term at Abraham Baldwin Agricultural College.

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