Job-Order Costing. Job-order costing is used when different types of products, jobs, or batches are produced within a period. In a job-order costing system, direct materials costs and direct labor costs are usually traced directly to jobs. Overhead is applied to jobs using a predetermined rate. Actual overhead costs are not traced to jobs. Examples of industries in which job-order costing is used include special order.
Job order costing is a system of expense monitoring in which a business only creates products to fill customer/client orders. Employees complete job order cost sheets for each order and usually separate expenses into three main categories: direct material, direct labor and manufacturing overhead. Companies in many industries can use job order costing, though a variety of product offerings/services complicates the tracking of expenses.