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The use of job costing as a tool for the pricing and cost control decisions in the printing industry: the case of Société de Presse et d'Editions (SOPECAM)

par Christian Kuiate Sobngwi
University of Buea - Bachelor of Science 2003

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Job costing is cost accounting method, and as such when using it or adopting it in a company, we are required to follow a set of procedures for the recording of the various transactions in the company.

This recording can be made using either an interlocking or an integrated cost accounting system. An integrated cost accounting system is one in which the financial and cost accounts are combined in one set of accounts. In an interlocking cost accounting system, the financial and cost accounts are maintained independently. As stated by Drury (1992), it is better to adopt an integrated cost accounting system as this permits to avoid the duplication of records.

In job costing, the basis for the recording of transactions is a set of control accounts. A control account is a summary account where entries are made from totals of a period's transactions; these totals come from the individual accounts where the transactions are primarily recorded and these are called subsidiary ledger accounts. In addition to posting these transactions in the various accounts concerned, we will have to post them on a Job cost card or job cost sheet.

The job cost sheet is a form prepared for each separate job that records the materials, labour and overheads costs charged to the job.

The accounting procedures and mechanics of job costing will be examined following the various steps involved in the manufacture of a product by a manufacturing company, that is from the purchase of raw materials to the selling of the finished goods, passing through the charging of labour and overhead costs, Drury (1992) and Garrison & Noreen (2003).

1. Purchases of raw materials

Following the double entry principle and the other rules of financial accounting, if raw materials are acquired, this represents an increase in current assets but also an increase in the level of current liabilities until cash payment is made; this transaction will then be recorded as such:

Dr stores ledger control account......................******

Cr creditors control account..................******

2. Issue of raw materials

This transaction occurs when materials are needed in the production department, the production department will request a particular quantity of materials using a material requisition form on which the job number will be specified. This form will be presented to the storekeeper, who in turn will supply the materials requested.

Dr Work in progress account.................*****

Cr stores ledger account..............*****

The work in progress account represents the products that are not yet completed and until a good is complete it is considered as part of the work in progress stock and all the items entering in its production should be posted on that account.

The above record concerned the issue of direct materials, if some indirect material is issued, then the following record should be used:

Dr Factory overhead control accounts...........*****

Cr stores ledger control account.........*****

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