Job Costing - Do You Know How?

What's your job profitability? I meet with business owners every day that are unsure of their profitability at a company or job level. They "think" they are making money because they have a few dollars in their checking account. Having money in your checking account doesn't mean you are profitable. It might mean you haven't paid all the bills yet, so you have a little cash. Cash and profit are two different concepts. If you aren't profitable, you won't have longevity in your business.

It doesn't matter the size of your business or the industry. Profitability is something you should be monitoring on a regular monthly basis. No business is too small or too large to do job costing. Such an excuse is your way of not holding yourself accountable to managing your business wisely. Failing to plan is a plan for failure.

So what do I mean by job costing? You should know how much you make and spend on each job. Expenditures should be tracked for those direct labor and material costs to each job. In addition, you should also be tracking overhead costs and allocating them to your various jobs as applicable. There is always going to be some overhead that is considered general overhead. Though often times too many dollars are thrown into general overhead, when they could easily be tracked to specific jobs. If you don't know your exact income and expenses for each job and your overall business, then how can you know you are making a profit?

QuickBooks® has easy-to-use features that allow you to do job costing for time and materials. So don't worry about having to track it all manually. Rely on tools to help you run your business more efficiently and effectively.

Are you curious how you are doing with job costing measurements? Here are some quick and easy questions to gauge your job costing performance:

1. Do I track each customer's revenue information through a detailed invoice?

2. Do I have a way of breaking down my direct job materials cost by customer?

3. Do I associate all time spent to each job accurately with actual dollar amounts?

4. Do I have access to reports to monitor profitability on each job in a timely manner?

5. Do I have a way to trend the fluctuations in job profitability from job to job, month to month, etc?

If you answered "NO" to any of these, then it's time for you to take an objective look at your financial goals. It's time for you to implement a job costing mechanism to help you answer "YES" to these questions. How can you track your profitability and long-term growth plans if you don't have detail at a job level?

Here are some quick and easy ways to utilize QuickBooks® effectively to help you with your job costing process:

1. Set up the QuickBooks® Item list so that you'll have both an expense and an income aspect to each of the items. This will allow you to track your costs and your income; therefore, providing you profit by item.

2. Record your sales through the invoicing or sales receipt process. This will record the income aspects of the items.

3. As you purchase the product or service items, make sure that you utilize the Items tab so that it will record to the cost to the appropriate item. In addition, make sure to assign your customer/job information to each line item so that you'll have the costs associated to the appropriate customer/job for job costing.

4. Utilize the time tracking mechanism in QuickBooks® so that you and your employees can track their time by item and customer/job. No dollar value is associated with this time until you actually pay the employees within QuickBooks®.

5. QuickBooks® has preformatted reports that you can access to have job costing information right at your fingertips. These are found under the Reporting menu and the Jobs/Time/Mileage option.

6. QuickBooks® has the ability to provide reports for any time period you select. This will allow you to have a variety of detail over the growth of your business and to produce trending reports. You can modify the report as needed to meet your needs.

One additional important aspect is that you have a good accounting professional on your team of resources. They will be able to help you understand what these reports are telling you in terms that you can use. Reports alone don't provide value if you don't understand them. So it is key that you understand the reporting information and how you can utilize that information to assist you in decision-making as you grow your business profitably.

It's all about how you set-up your accounting/bookkeeping software package and how you use it! What justification can you give for not knowing job costs within your business? None! Challenge yourself today to become more adept at running a financially savvy business through job costing.

Contact: Pam is the author of Out of the Red, a Certified Management Accountant, and a Certified QuickBooks® ProAdvisor. QuickBooks® is a registered trademark of Intuit. 816.304.4398. http://www.rppc.net

In The News:


pen paper and inkwell


cat break through


The Key to a Successful Business

Where would a business be without a business plan? A... Read More

Is Your Business Legally Prepared?

It is imperative to have your business legally prepared. How... Read More

Where To Get Money For a Franchise Idea

How often have you thumbed through a business opportunity magazine,... Read More

Cabinet Refacing Business Opportunities

With all the cabinet refacing business opportunities out there, you... Read More

Small Business Mistakes: Are You Making Enough of Them?

That's right ­ are you making enough mistakes in your... Read More

Mobile Pressure Washing and Cleaning Scheduling

If you own a mobile car washing, pressure washing or... Read More

Understanding Franchise Releationships in a Franchised Business

Now that you have invested your time, energy and money... Read More

Bad Regulators Cost Small Businesses

When a regulator finds a target to go after to... Read More

Look Like Sizzle, Be The Steak

You've heard marketing and advertising gurus quip, "Sell the sizzle,... Read More

Starting a Pressure Washing Business

Are you thinking of starting a small pressure washer business... Read More

Janitorial Cleaning Service: Getting Started

A janitorial cleaning service is one of the best businesses... Read More

Reaping the Rewards of Cost Cutting

In these days of insecurity and uncertain futures, the tendency... Read More

How to Start Home Based Travel Businesses

Home based travel businesses are no longer the wave of... Read More

Promote Yourself More Successfully

One of the great challenges for independent professionals and small... Read More

The Advisory Board: A Business Owners Most Valuable Resource

As a company grows, the owner's role begins to change.... Read More

To Buy A Fat Pig

What does buying a fat pig have to do with... Read More

Finding the PERFECT Alliance Partner

Where do you look for the appropriate alliance?One of the... Read More

Profits are within 6 Degrees of Freedom

How far away is the person you need to meet?We... Read More

A Look at Small Business Incorporating in Florida

The choice to incorporate a small business in Florida has... Read More

The Truth About Government Grants for Your Business

Free money! Receive up to $25,000 that never has to... Read More

Do I Have to Do EVERYTHING Myself?!

The air in my client's office nearly crackled with her... Read More

Common Sources of Financing for Small Business

The choice of financing is an important determinant of whether... Read More

Get Approved for a Franchise

Deciding to start your own franchise is just one of... Read More

Tell Me The Reasons Why I Should Believe You?

Have you ever heard the phrase, 'PREPONDERANCE OF PROOF'?I recently... Read More

How to Handle Rejection When You Start an Office Cleaning Business

"If at first you don't succeed, then skydiving definitely isn't... Read More

Operating Your Small Business ? Everything Really Is a Project

Do you operate your business as a series of projects,... Read More

Where to Find a Cash Windfall of $10,000 to $1,000,000 -- You Never Knew You Had

There is a rather famous true story called "Acres of... Read More

Six Essential Skills to Business Success!

The following are six essential skills to business success. You... Read More

Finding the Right People for your Business

Where do you find the right people for a business... Read More

Get Free Payroll Forms Download from the Internet

Having a successful business means also having a good working... Read More

Dispute Resolution; Competing With Other Franchisees

If you are in a franchise and have a territory... Read More

Online Search: Small Businesses Level The Playing Field

Seventy percent of US households use the web when shopping... Read More

Mobile Pressure Washing and City Contracts

Many mobile pressure-washing companies turn to government contacts to make... Read More