Question

Which of the following is not a disadvantage of Job Costing?

• A. It is too expensive.
• B. It is very time consuming.
• C. It is a very tedious task to maintain separate records for each job.
• D. It can be easily fitted into the double entry system.

Hint:

In job costing, the primary control account is the Work-in-Progress (WIP) Control Account, which aggregates all individual jobs and seamlessly links them back to the general ledger.

Answer 1

The Correct Option is D

Step 1: Reviewing the Concept of Job Costing:
Job costing is a specialized cost accounting system used by businesses that produce unique, custom-made goods or services based on specific customer orders (e.g., printing presses, repair shops, shipbuilders).

Step 2: Evaluating the Disadvantages of Job Costing:

• High Cost (A): Setting up individual cost tracking systems for every unique order requires significant administrative work, making it expensive to maintain.
• Time Consuming (B): Tracking materials and labor hours for separate jobs demands meticulous, continuous record-keeping.
• Tedious Administration (C): Recording, classifying, and allocating indirect costs to numerous distinct jobs is complex and detail-heavy.

Step 3: Analyzing Option (D):
The ability to integrate job costing into a company's double-entry accounting system is a major advantage, as it ensures mathematical accuracy and consistency between cost and financial ledgers. Therefore, (D) is not a disadvantage of Job Costing.