Job costing is widely perceived to be an important management tool of commercial printing companies.  Printing industry accountants and management gurus have advocated the use of job costing for years, and job costing functionality is now a basic feature of all major print-specific MIS/ERP systems.

As most of you already know, job costing is used to calculate the approximate cost of producing individual print jobs.  The methodology of job costing is fairly straightforward. At each step of the production process, employees record the time they spend working on a job.  Production time is converted into costs through the use of hourly cost rates that are established for each production activity.  The cost of all required materials (stock, ink, plates, etc.) and the cost of any required outside services are also assigned or “charged” to the job.  When all of these costs are added together, the result—at least in theory—is an accurate measure of the total cost incurred by the company to produce the job.

Supporters argue that the primary benefit of job costing is that it enables managers to measure the profitability of individual print jobs.  In practice, the most widespread use of job cost information is to compare the estimated cost of a job with the “actual” cost incurred to produce the job.  If a job appears to be unprofitable, or less profitable than expected, this comparison helps managers understand why.  For example, comparing estimated with actual job costs can signal where mistakes were made in the estimating process or when the production standards used in the estimating system are not accurate.  If, on the other hand, the estimated costs appear to be sound, this kind of analysis can reveal which production processes went awry and created excessive costs.