Job Costing and Batch Costing are two types of production costs that are calculated as per the data available in each type of company. And, job costing is considered to be a modified version of batch costing. Both job costing and batch costing are two important elements of the production department that give the company clear data of products. The detailed difference is discussed below with a table.
Job Costing vs Batch Costing
The main difference between job costing and batch costing is that the definitions of both costings are different from each other and it gives the main difference between them. Job costing refers to the cost that is calculated with the help of the total number of jobs, contracts, or work orders of a company. On the other hand, batch costing refers to the cost that is calculated with the help of calculating the cost of each batch of products that are manufactured. Since we know that the job costing is only the advanced version of batch costing and therefore it almost means the same thing but its method of calculating is different.
Job costing refers to the cost that is calculated with the help of the total number of products as per the customer’s demand. The job coatings are taken into consideration as per the customer’s demand. Job costing is a new concept that has been implemented in the production service and is new because it is the advanced version of batch costing.
On the other hand, Batch costing refers to the cost that is calculated with the help of calculating the cost of each batch of products that are being manufactured. The batch costing is taken into consideration as per the sum of the total production, in the form of batches. Batch costing is comparatively an old concept that has been used in companies for many, many years now.
Comparison Table Between Job Costing and Batch Costing
| Parameters of Comparison | Job Costing | Batch Costing |
| Definition | The production of products according to the customer’s demands and the method that is used to calculate this production costing is known as job costing. | The production of products when calculated in a specific unit or batch and further the cost is determined is termed to be batch costing. |
| Concept Duration | Job costing is a new concept that was introduced as an advanced method of batch costing. | Batch costing is comparatively an old concept and has been introduced many years ago. |
| Production | The manufacture of the products in a job costing method is determined as per the customer’s demand. | The manufacture of the products in a batch costing is determined in big units. |
| Ideal Industries | Job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. | Batch costing is helpful for those small industries that produce or manufacture products as per the batches. |
| Calculation | Job costing is the method that is used to calculate daily. | Batch costing is the method that is used to calculate it weekly or monthly. |
| Advantages | The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. | The advantages of batch costing are that the labor cost is decreased and hence the final price of the product is lowered, the production activity is faster, it is very useful for the smaller businesses, etc. |
| Disadvantages | The disadvantages of job costing include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. | The disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working then it affects the whole batch of products as it delays the production. |
| Example | Examples of job costing products include things such as a customized shoe, dress, jewelry, etc. | Examples of batch costing products include things such as garments, TVs, refrigerators, mobiles, etc. |
What is Job Costing?
The method of the cost that is determined according to the customer’s demand or choice is generally termed as Job Costing. Job costing is none other than the advanced version of batch costing, which simply determines the value of each product that is sold or consumed by the other person. The manufacture of the products in a job costing method is determined as per the customer’s demand. That means each product determines the job costing of the industries. Also, the Job Costing includes various types of processes and that process includes things such as Receiving Enquiries, Estimating Prices, Receiving Client Order, Producing the Order, Execution and Inspection, and the Delhivery of the product. Without these processes, the job costing can not be estimated and hence these are important aspects of Job Costing.
Some particular industries use the job costing method solely to determine their requirements. Hence, job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. Job costing is the method that is used to calculate daily production. This is because of the main motive of the costing, as we know this costing is individually determined, and therefore it can be calculated daily.
There are pros and cons for everything and therefore job costing method has its pros and cons. The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. And its disadvantages include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. There are many examples of job costing and they are things such as a customized shoe, dress, jewelry, etc.
What is Batch Costing?
The industries that calculate the production costing into a particular batch of products and this method is known as batch costing. In short, the production is collectively calculated into units. Batch costing can be termed be an old concept that is been used for many years now. And further, for more specific distinction, the batch costing was improvised into job costing. As we know, batch costing is determined based on the manufacture of the products in bigger units. And therefore, its requires to give detailed specifications for each product in a particular batch.
Batch costing is the method that is used requires to be calculated weekly or monthly. As we know it is counted in units, therefore the industries need to wait for the accomplishment of manufacturing each batch so that it is convenient to count on. Some examples of batch costing products include things such as garments, TVs, refrigerators, mobiles, etc. These things are included in batch costing because, these items are manufactured in the same specific design, logo, model. usages, etc. Therefore, the items look alike.
Some advantages and disadvantages of job costing and batch costing are, the advantages of batch costing are that the labor cost is decreased and hence the final price of the product is lowered, the production activity is faster, it is very useful for the smaller businesses, etc. And, the disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working then it affects the whole batch of products as it delays the production.
Main Differences Between Job Costing and Batch Costing
- The production of products according to the customer’s demands and the method that is used to calculate this production costing is known as job costing. On the other hand, the production of products when calculated in a specific unit or batch and further the cost is determined is termed to be batch costing.
- Job costing is a new concept that was introduced as an advanced method of batch costing. On the other hand, Batch costing is comparatively an old concept and has been introduced many years ago.
- The manufacture of the products in a job costing method is determined as per the customer’s demand. On the other hand, the manufacture of the products in a batch costing is determined in big units.
- Job costing is helpful for those industries that produce or manufactures goods as per the customer’s demand. On the other hand, Batch costing is helpful for those small industries that produce or manufacture products as per the batches.
- Job costing is the method that is used to calculate daily. On the other hand, Batch costing is the method that is used to calculate it weekly or monthly.
- The advantages of job costing are that the company gets every minor detail of the material, labor, etc. It also gives a clear image of each job’s profit and loss, it helps to plan similar future projects, etc. On the other hand, the advantages of batch costing are that the labor cost is decreased and hence the final price of the product is lowered, the production activity is faster, it is very useful for the smaller businesses, etc.
- The disadvantages of job costing include things such as it requires a lot of manpower, the employees must be fully skilled and trained, etc. On the other hand, the disadvantages of batch costing include things such as it requiring a spacious place to store the products, if a machine stops working then it affects the whole batch of products as it delays the production.
- Examples of job costing products include things such as a customized shoe, dress, jewelry, etc. On the other hand, examples of batch costing products include things such as garments, TVs, refrigerators, mobiles, etc.
Conclusion
Job Costing and Batch Costing are often mixed up by people, as they think they represent the same thing. But, it’s not the same and hence there are many differences between them. Job costing can simply be considered as the modified version of batch costing. Both the coatings are important for the industries as it allows the industries to have a clear vision and growth of the industries. Also, the costing methods are used according to the requirements of the respective industries. A detailed discussion between job costing and batch costing has been discussed above.
References
- https://link.springer.com/chapter/10.1007/978-1-349-19930-3_8
- https://link.springer.com/chapter/10.1007/978-1-349-90655-0_8