Job costing is an accounting method that tracks the costs and revenues associated with individual projects and jobs. It is used to determine the labor and materials cost for each job in a systematic way, and then use this information to calculate profitability by job. Job costing is commonly used by construction companies, manufacturers, creative agencies, law firms, and more.

To apply job costing in a manufacturing setting, it involves tracking which "job" uses various types of direct expenses such as direct labor and direct materials, and then allocating overhead costs (indirect labor, warranty costs, quality control, and other overhead costs) to the jobs. Job costing may assess all costs involved in a construction "job" or in the manufacturing of goods done in discrete batches.

Job costing is calculated by accumulating the cost of direct labor costs, direct material costs, indirect material costs, and total overhead costs on a specific job. The accounting activities involved in calculating job costing are calculating labor costs, allocating overhead costs, and calculating the total cost of the job.

Job costing is an investment into a company that is necessary for the ongoing success and profitability of the business, ensuring that the company gets paid enough not only to cover its costs but also to make enough of a profit to grow the business. Accurate job costing can improve profitability, help better manage employee scheduling, and be a key component of prompt financial reporting.

Job costing differs from process costing in that the flow of costs is tracked by job or batch instead of by process. Job costing is used to accumulate costs at a small-unit level, and it is appropriate for deriving the cost of constructing a custom machine, designing a software program, constructing a building, or manufacturing a small batch of products.

Overall, job costing is a precise method of tracking all the costs and revenue associated with a particular project, and it can be a helpful tool for small business owners to evaluate individual jobs and see if any expenses can be reduced on similar projects in the future.