Contractor Finance Glossary
What is Job Costing?
Also called: project costing
Job costing is the practice of allocating every dollar of cost (labor, materials, equipment, subcontractors, and overhead) to the specific job that consumed it, so each job produces one number: gross margin.
Revenue is only half of job costing. Most contractors track job revenue in their field software and assume that means they have job costing. They do not. Without labor, material, and subcontractor cost coded to the same job, you have a revenue ledger and a payroll ledger, but no job margin.
The test is simple. If you cannot pull a list of every job last month with revenue, cost, and margin in three columns, you do not have job costing. You have a revenue report. Level runs this allocation across field and accounting systems so every job carries a true margin.
How it is calculated
Job gross margin = (job revenue minus job cost) divided by job revenue, where job cost sums allocated labor (burdened), materials, equipment, and subcontractor cost for that job.
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