by microhard / Asset Management
Job Tracking Solutions in Dubai
Job Tracking is an accounting tool that allows businesses to track costs by individual jobs. Job Tracking is calculated by accumulating the cost of labor, materials and overhead for a specific project. In other words, Job Tracking is a Tracking method used to determine the cost of specific jobs, which are performed according to the customer’s specifications. It is a basic Tracking method which is applicable where work consists of separate projects or contract jobs.
What Is Job Tracking?
Job Tracking, also called project-based accounting, is the process of tracking costs and revenue for each individual project. Job Tracking looks at each project in detail, breaking down the costs of labor, materials and overhead. It makes fewer assumptions than other Tracking methods.
Job Tracking is commonly used in the construction industry, where costs vary widely from job to job. But it’s also used by manufacturers, creative agencies, law firms and more. Because job Tracking tracks costs in detail for each job, 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.
Features of job Tracking
- Using job Tracking, the cost of each job is ascertained separately. This, in turn, helps in finding out the profit or loss on each job.
- It enables management to detect those jobs which are more profitable and unprofitable ones.
- Job Tracking provides the base for determining the cost of similar jobs to be undertaken in future as a part of future planning.
- Helps in managing and controlling costs, by comparing the actual costs with the estimated cost. In short, the calculation of variances.
How to Calculate Job Tracking
Job Tracking is calculated by accumulating the cost of labor, materials and overhead on a specific job. The accounting activities involved in calculating job Tracking are:
- Calculate Labor Costs
Calculate how much it costs your business to employ all staff members who will work on the project per day. Multiply the payroll day rate by the amount of time you estimate you’ll need to complete the job. If you’ll rely on subcontractors for work your company doesn’t complete itself, factor those costs into your total labor costs for the job. It can help to get an estimate from each of these contractors.
- Calculate Material Costs
Calculate the cost of all materials used on the job. For a construction business, this would include materials such as lumber, wiring, screws and more. You may choose to add a margin to these materials to cover other related costs including wastage or delivery fees.
- Estimate Applied Overhead
Overhead is the most difficult cost to calculate, because you’ll need to rely on an approximation instead of a more exact figure. You’ll need to estimate the total overhead costs factoring into the job, including rent on your office, administrative costs and depreciation on the equipment used. Many businesses apply a blanket overhead fee to each project, such as 10 percent per job. An accountant can help you analyse your business and develop a specific approach to overhead. Or, you can calculate your predetermined overhead rate.
Types of business that use job Tracking system
Generally, the application of job Tracking method is followed in industries such as printing press, automobile garage, repair workshops, shipbuilding, foundry, and other similar manufacturing units, which manufactures according to customer’s specific requirements. A business that applies Tracking method usually has the following characteristics:
- Production is carried out based on the customer’s specification
- Products are manufactured in distinguishable lots
- Products produced are of not uniform nature
- It is practical to maintain a separate record of each lot from the time production is begun until it is completed.
Advantages of job Tracking
- Profitability for each job can be individually determined
- Provides a detailed cost analysis of materials, labour and overheads for each job as and when required
- The efficiency of the plant can be controlled by confining attention to costs relating to individual jobs.
- Helps in preparation of estimates
- Comparison of actual cost with estimated cost and calculation of variances.
- Helps in identifying unprofitable jobs
- Helps in providing a precise quotation for a product
How do business track and prepare job cost sheet?
Given the complexities associated with managing costs for each job, most businesses have automated the preparation of job sheet using accounting software. The accounting software or Microhard Infotech Job Tracking Solutions helps you manage and track multiple jobs easily with the help of barcode or QR Codes to identify various jobs. Tracking material movement across the jobs, consumption and asserting profitability is easier using accounting software. With reports and summaries available instantly, informed decisions can be made on-time.
