PROJECT COSTING & TRACKING SOFTWARE

Job costing, also referred to as project-based accounting, is the process of tracking and calculating costs and revenue related to a project. Job costs generally include labour costs, material costs and overhead costs also known as operational expenses. Calculating these costs helps to estimate future projects based on past project performance.

Job costing requires a business to calculate the costs of labour, materials and overhead needed to complete a specific job while process costing involves calculating the cost of large-scale processes such as mass-production of similar items over a period of time. Companies that mass-produce use this method to cost their entire operation. 

Direct material costs include costs for materials that comprise the finished product while indirect material costs include costs for materials that are needed to complete the job but do not form part of the finished product including machinery and tools. Job costing should account for direct material costs and indirect material costs.

Job costing is used by various businesses that provide products and services to complete projects for clients including manufacturers, marketing agencies, engineering companies, law firms and food processing businesses. It is often used in the construction industry to facilitate construction project management and estimate construction costs including building materials, labour and subcontractor costs and overheads.

Quickbooks job costing software helps businesses better budget and plan for future projects based on past project performance. Tracking project costs allows you to evaluate specific jobs to determine where costs can be reduced on similar projects in the future to increase project profitability.

You need to consider a number of factors when setting prices for labour and materials when estimating job costs. These include production and distribution costs, competitor offerings, positioning strategies and the business’ target customer base. A pricing strategy helps you determine the price point at which your business can maximize profits on projects. Learn more about different pricing strategies to use in your business.