Contract costing

Contract costing

Large companies also use job costing when their produce a variety of different, and often unique, products at the same time. These products are often referred to as custom built and each is separately costed as a `job' in its own right. This type of production is described as intermittent (and traditionally referred to as job shop production) to distinguish it from the continuous or assembly-line production associated with the manufacture of a large number of identical units.

In jobbing production, individual manufactured units are normally produced to meet an individual customer's requirements and production is not normally speculative. Costs are agreed before manufacturing starts and they form the basis of a contract between the manufacturer and the customer.