Job costing is a weapon that any business can use to make more money. If they can accurately trace the cost of each piece of work, companies understand how to price, how to allocate, how to strategize. QuickBooks, a very powerful accounting package, is one of the most helpful tools to use for good job cost control.
The Importance of Accurate Job Costing
Effective costing provides insight into the profitability of a business. Once companies know the true price of each job, they can discover how to do better, whether it’s by reducing labor costs or eliminating waste in materials. In addition, accurate job costing enables businesses to quote competitively, to avoid underbidding and ultimately, to maximize total profitability.
Key Steps to Improve Job Costing with QuickBooks
To effectively improve job costing with QuickBooks, clearly define different job types and assign specific cost categories. Measure hours of labor and the cost of labor, both direct and indirect labor. Allocate overhead to each job by some method. Generate detailed QuickBooks reports of job profitability, labor, material and overhead & act on these reports to better oneself, and to decide.
Tips for Improving Job Costing Accuracy
To improve job costing, make your staff understand the purpose of job costing and the use of QuickBooks. Review and adjust job cost estimates at regular intervals to reflect changes in labor rate, material cost, and overhead rate. Implement robust time tracking tools to accurately record time spent on each job. Optimize data entry procedures to reduce human errors and maximize speed.
If they do, if they use these strategies, if they tap into the power of QuickBooks, then job costing will be more accurate, profits will be higher, and more intelligent decision making will result in expansion.
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