Difference between Job costing and operating costing

JOB COSTING OPERATING COSTING

1) Job costing is one of the methods Operating costing is one of the variants of
Of costing process costing. It is also known as
2 methods of costing, “service costing”
a)job costing b) process costing

2) Job costing is used in those Operating costing is of cost of services.

business concerns where The calculation of cost of service
production is carried out as per rendered in the form of price is known as
specific order and customer “operating costing”
specifications.
3) In job costing each job (or In operating costing service is continuous
product) is separate and different in nature. Each cost is necessary to
from the other jobs or products. calculate in order to find out per person
cost, per km, per meal
4) Job order system is used by Operating costing method is used by
manufacturing concerns where an those organisations which render services
order is produced to a customer’s and do not manufacture any physical
specification such as building, item, such as transport, power house,
contracting, furniture and general hospital
engineering.
5) Unit costs are computed by job on The cost units are usually applied in
the job cost sheet. different service undertaking but the units
are passenger-mile, tonne-mile, a bed in
hospital, per student in college.
6) In job costing costs are recorded On the other side, cost units differ among
separately for the ascertainment of the service organisations depending upon
the cost of the work done on each the nature of service being rendered.
order.
7) Following are some of the For the calculation of operating cost we
important costs which are need to need to consider following costs
be considered while calculating a) Maintenance charges/ costs
job costing b) Running cost
a) Direct labour cost c) Fixed charges/ standing charges
b) Cost of material
c) Fixed cost
d) Other variable overheads
8) It helps for preparation of It helps to determine the cost of operating
quotation for different jobs and its services from a management control
also helps for preparing of budget and management information point of
for the future view.