Contractor Finance Glossary
What is Job Costing?
Definition reviewed .
Also called: project costing
Job costing assigns revenue and direct job costs (burdened labor, materials, equipment and subcontractors) to the same job so its gross profit and gross margin can be calculated on a stated cost basis.
Revenue is only half of job costing. Without labor, material and subcontractor cost coded to the same job and reporting period, a revenue report cannot establish job margin. Include job-related field overhead when that is part of your cost-of-revenue policy; allocating company general and administrative overhead produces a separate job profit measure.
Pull every closed job with revenue, coded cost and margin. Rerun the list 30 to 45 days later as an operator test, not a required accounting interval. If margins fall after late vendor bills or payroll arrive, investigate cost cutoff and uncoded costs before treating the original margin as final. Level connects field and accounting information to support this review; unresolved costs and missing access remain explicit reconciliation items.
How it is calculated
Job gross profit = job revenue minus job cost of revenue. Job gross margin = job gross profit divided by job revenue, when revenue is positive. State whether field overhead is included; keep allocated company G&A separate from this gross-margin measure.
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