Question

Job cost sheets are used to track all of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.

Answer 1

Job cost sheets track direct materials, direct labor, and overhead costs for a job, excluding selling and administrative costs. An example from 'The Clip Joint' barber shop illustrates how fixed and variable costs are tabulated to calculate total costs for a specific level of production.

Step-by-step explanation:

Job cost sheets are a fundamental component in tracking the expenses associated with a specific job, particularly in businesses where customized or unique products are produced, like manufacturing or construction projects. These costs normally include direct materials, direct labor, and overhead. However, the sheets typically do not track selling and administrative costs, as they are not directly associated with the production of specific jobs but are rather period costs that apply to the operation as a whole.

For example, in a barber shop scenario, The Clip Joint, has fixed costs for its space and equipment amounting to $160 per day. Additionally, it has variable costs like the cost of hiring barbers, which in this instance is $80 per barber per day. The total costs would be evaluated by summing both fixed and variable costs as production levels vary. For example, employing two barbers would incur a cost of 2 × $80 = $160 in variable costs, adding this to the fixed costs of $160 results in total costs of $320.